Spoofing and Manipulative Trading

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Spoofing is the scheme of deceiving others on the market regarding the price and making them believe that the price is higher or lower. It is illegal and is considered a crime under the 2010 Dodd-Frank Act(CFTC, n.d.). The case is related to spoofing committed by a Californian trader Nicolas Mejia Scrivener. He was placing orders that he was not planning to execute that varied from the market price multiple times. He was doing so to create visibility of prices being higher or lower on the market, and he used this to deceive other traders for his own benefit(Corporate Finance Insititute, n.d.). The traders that engaged in these offers suffered from extra costs for their deals. Regarding the ethical framework, it is hard to tell anything based on the facts from the case. Nevertheless, it seems that the violator perceived his actions as not dramatically harmful, therefore, he felt fine with his illegal actions.

Scrivener’s actions resulted in him profiting approximately $140,000 by using this scheme. It was found out in the further investigation that Scrivener used multiple accounts to create these offers that he did not plan to execute (SEC, 2020). Scrivener settled the matter without admitting or denying the allegations but by agreeing to pay $140,250 in disgorgement, $15,020 in prejudgment interest, and a civil money penalty of $50,000. According to the SEC’s decision, Scrivener’s actions were in violation of Section 9(a)(2) of the Securities Exchange Act of 1934’s market manipulation requirements (GovInfo, 2021). This means that Scrivener not only lost all the profit that he gained from the illegal activity but was fined for it as well. I believe that the resolution of the violation is justified as Scrivener was purposefully deceiving traders and was benefiting from it. It is considered illegal by law, and therefore such actions are prohibited.