BofA Securities Inc. has been sanctioned in a settlement with the U.S. Financial Industry Regulatory Authority Inc. (FINRA) over manipulative trading by a couple of its former traders in the U.S. Treasury markets.
The U.S. self-regulatory organization fined the firm US$24 million for supervisory failures involving hundreds of spoofing orders that were entered by a pair of traders between 2014 and 2022.
According to the SRO, BofA Securities failed to establish supervisory systems that were capable of detecting spoofing in the secondary Treasury markets.
“Spoofing undermines the transparency and integrity of the markets by distorting the true nature of supply and demand,” said Bill St. Louis, executive vice-president and head of enforcement with FINRA, in a release. “Spoofing is especially detrimental in the U.S. Treasury securities market, given its status as a benchmark for countless financial instruments and transactions.”
“This action sends a strong message that FINRA will aggressively pursue firms that engage in spoofing, including cross-product spoofing,” he said.
BofA settled the case without admitting or denying the SRO’s allegations.