A trader accused of manipulating swap prices and making false statements to regulators during an investigation has settled the misleading investigators charge, as regulators dropped the market manipulation allegations.
The U.S. Commodity Futures Trading Commission (CFTC) entered a consent order in the U.S. district court for the Southern District of New York resolving its enforcement case against John Patrick Gorman III, a swaps trader and managing director of Nomura. Gorman must pay a US$90,000 penalty after he was found to have made false statements to the CFTC during an investigation.
The order also dismisses other allegations it made against Gorman in 2021, when it charged him with manipulating, and attempting to manipulate, the price of swaps to benefit his bank.
In its original complaint, the CFTC alleged that, in 2015, when a bond issuer was pricing a new issue and a related swap, Gorman attempted to manipulate the price of swap spreads by selling swaps in an an effort to drive down prices.
The regulator also alleged that Gorman tried to cover up his alleged misconduct by deleting WhatsApp messages about his trading activity that the CFTC asked him to preserve, and falsely attesting that he had saved the messages as requested.
Now, the CFTC is settling that charge, and dismissing allegations about the underlying conduct that was the subject of the regulator’s investigation. Those charges were dismissed with prejudice by the order, meaning that they can’t be revisited.
“Attempts to impede or obstruct the commission’s investigations go to the very heart of the division’s ability to detect wrongdoing and enforce the law,” said CFTC director of enforcement, David Miller, in a release.
“As today’s resolution shows, we have zero tolerance for false statements made to staff during the course of an investigation,” it said.