The U.K.’s financial regulator is investigating three traders at the same bank for engaging in market abuse in the weeks before and after the Brexit vote in 2016.
The Financial Conduct Authority published the warning notice against the unnamed traders Friday, accusing the trio of deliberately engaging in a form of spoofing by placing orders they didn’t intend to execute in the summer of 2016. A warning notice comes after an internal investigation but before a formal ruling by the regulator’s decision-making panel.
The trading activity took place through June and July 2016, the FCA said. The U.K.’s vote on whether to leave the European Union was on June 23. The three anonymous traders placed false large orders for futures only to make smaller orders on the other side of the trade, the FCA said.
They carried on this pattern of misleading trading both individually and in conjunction with each other, the regulator said.
The FCA declined to immediately comment further.
The regulator has prosecuted fewer than a handful of similar cases of market manipulation. The watchdog fined a London trader 100,000 pounds ($138,680) for market abuse in December last year.
Before that, its last high-profile case date back to 2017, when it fined a former Bank of America Corp. bond trader 60,000 pounds for creating a misleading impression of supply and demand in the trading of Dutch state loans.
A former JPMorgan Chase & Co. trader recently won a London employment fight after a judge rejected claims he’d engaged in market spoofing.
While submitting and canceling orders isn’t illegal, it is unlawful as part of a strategy intended to dupe other traders and create a false impression of demand.
The traders have a right to make representations to the FCA panel, and that decision can also be appealed.