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The way a spoof works is this: A trader places large orders to, say, sell a financial instrument.
More granularly, the Commodities Futures Trading Commission (CFTC) and the Department of Justice (DOJ) allege that Mr. Sarao engaged in "spoofing", a form of manipulation in which a trader places and then cancels large orders, oftentimes in order to profitably manipulate prices.
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Jérôme Kerviel, the trader placed under investigation for the French bank's euro4.9 billion ($7.2 billion) loss, said that he would refuse to be made a "scapegoat" in the affair.
One of the best-known case studies comes from the near-collapse of the investment bank Salomon Brothers, in 1991, when Paul Mozer, a trader, placed fraudulent bids in a U.S. Treasury securities auction in the name of clients who were unaware of the fraud.
In the January contract one trader placed an intriguing trade.
It can't mandate that the hedge fund trader placing it reveals his intentions for his other 90,000 shares.
This can relate to the 4pm fix, with a trader placing a trade before 4pm because he knows something will happen at around 4pm.
Ten years ago, coming here as a tourist was regarded as intrepid, but many of the smarter traders, places like Baroni and Perini, up at the front by the doors, have realised that gastro-tourism is a moneyspinner.
Helped by friendly fund managers, late traders place buy or sell orders after the value of a fund has been set at the end of the trading day.
Pundits and traders placed their bets, confident that the cartel would not risk the blow to credibility that would come from breaking its promise.
Expecting tough new rules in the wake of the controversy, Mr. Eisman and other hedge fund traders placed huge bets against the industry.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com