The progress of two overseas financial manipulation cases is attracting a great deal of attention in the global financial and economic field.

First of all, more inside stories have been exposed about the negative oil price incident of WTI in the United States in 2020. Recently, a group of British traders will be tried in the United States on suspicion of manipulating crude oil market prices. They made a profit of more than $700 million (4.5 billion yuan) by viciously selling large quantities of WTI crude oil futures contracts during the extreme event of the crude oil futures collapse in 2020.

Trading data showed that the traders' trades on April 20, 2020 were "highly relevant", selling an average of 153.5 contracts per minute in the half hour before the close, accounting for 29.2 per cent of total trading volume in the global market. It is worth mentioning that the court documents also exposed the chat records of this group of traders, including "I want to see the WTI price become negative", "Please don't tell anyone what happened today", "We have worked hard for this moment for many years" and so on.

Another piece of news is related to the price manipulation of US Treasuries. On April 15, Taylor Tyler Forbes, a former trader at Bank of America Corporation Merrill Lynch, appeared in the US Eastern District Court in New York and admitted that the prices of US Treasuries traded in the secondary market between January 2019 and June 2019 were mainly composed of two-year and three-year Treasuries, as well as 10-year Treasuries.

Traders who made $700 million in negative oil prices were sued

Do you remember the negative oil price incident on April 20, 2020?

On April 20, 2020, the trading price and settlement price of West Texas Intermediate (WTI) futures, the benchmark oil price of the United States, fell into a negative area historically, which shocked the global financial market.

On April 20, 2020, oil fell into a negative range for the first time because the COVID-19 epidemic led to a sharp drop in fuel demand, triggering a glut of unused fuel on the market and potentially flooding existing storage facilities in the United States. The price of WTI oil plummeted to minus $38 before the benchmark monthly futures contract expired.

The move follows charges against more than a dozen traders at London-based Vega Capital London, a company registered in Essex. The group of traders between the ages of 20 and 50 made a profit of more than $700m by viciously selling large quantities of WTI crude oil futures contracts as the crude oil market collapsed. This group of British traders also became known as "Essex Boys".

Just recently, new developments have been made in the charges against this group of "Essex boys".

According to Bloomberg, the Guardian, the Financial Times, business insiders and other media reports, Mish International Monetary, a rare coin trader in California, which lost a lot of money on the day, filed a lawsuit. It is reported that this group of "Essex boys" will be tried in the United States, the United States District Court judge has approved the prosecution of Vega Capital's eight traders manipulating crude oil futures case.

Mish International Monetary, a California rare coin trader, said it lost a lot of money on April 20, 2020, and accused the traders of colluding to manipulate the market and violating antitrust laws. According to the lawsuit, the defendant bought a special "settlement transaction" (TAS) contract whose price was determined by the settlement value of the day, and then they conspired to sell a large number of ordinary WTI contracts before expiration.

According to Mish's lawsuit, several transactions of Essex Boys on April 20 of that year were "highly related", of which 96.2% to 99.7% were "in the same direction at the same time." These traders accounted for 29.2 per cent of total trading volume in WTI crude oil futures between 1:00 and 1:30 in the half-hour before the close, according to the Financial Times.

Traders linked to Vega Capital in London behaved like robbers when crude oil futures prices fell to a negative range of $56 a barrel before they expired on April 20, 2020, according to a lawsuit filed by Mish. It was alleged that the defendant conspired to trade on the settlement contract, which could be purchased at any time and the price was linked to the daily settlement window, which began two minutes before 1:30 in Central. The traders were then accused of flooding into the market through "virtual locking", forcing WTI prices to an all-time low. The lawsuit estimates that the group dumped 153.5 contracts per minute, or about 30 per cent of the total, within half an hour of expiration.

The next day, WTI rebounded from minus $37 a barrel to about $10, giving traders a huge windfall. According to the recently released ruling, the profit of CME Group Inc options is estimated at 633 million US dollars, and that of Intercontinental Exchange Inc of the United States is estimated at 71.88 million US dollars.

Mish argues that this group of UK traders manipulated the market in violation of antitrust law. As defendants, the Essex boys argued that they were independent traders and that what they did was obvious at the time.

The chat transcript was exposed: "Don't tell anyone what happened today."

It is worth mentioning that with the release of US court documents and media revelations, the trading behavior of these "Essex boys" in the 2020 negative oil price incident and their chat records on the social software WhatsAPP were exposed.

The traders communicated in text messages and WhatsAPP group chats, according to court documents. Exchange information includes:

On April 20, traders on the 9th and 12th communicated via text messages. From 10:51 to 12:00, the messages include: "continue to sell every 5 o'clock", "you must keep selling", "I sold more s at 14:00"[***], "I'm calling (someone who may be trader No. 4),"everyone is short, so we have ammo", "I want to see the WTI price go negative" and so on.

Traders on April 4th, 6th and 9th communicated through a group called "Legends XXX" in WhatsApp. Trader No. 9 wrote: "I shorted 160spreads and 40 WTI... Why don't you guys add a little more. Trader No. 6 replied, "I'll go short 1250 and 500. I'll go short later." Trader No. 9 continued, "I am 1100 and 310. Trader No. 4 said, "1300 and 500. Trader No. 6: "do it 200 later. Trader 9 said, "Okay, cool, I'll do the same. Trader No. 9 mentioned that there was an one-cent offer in the market, and he sold 500 Intercontinental Exchange Inc May contracts two minutes later.

Trader No. 1 and Trader 5 also communicated through WhatsApp on April 20. Trader No. 1 in the morning, "if you need to do anything, please let me know." "Trader No. 5 replied," OK, cheers, you can do ti (WTI futures contract) here. At 09:20, Trader 5 asked Trader 1 if he had sold the contract, and Trader 1 replied, "Yes, 50 lots." What about you? "the 5th replied," Yes, I sold it. "about ten minutes later, Trader No. 5 asked," has everyone shorted the WTI futures contract? "Trader No. 1 replied," Yes. "then, Trader 5 said," I made a fortune on TAS. "

At 03:13 on April 20th, Trader 2 sent a text message to others: "Please don't tell anyone what happened today, boys." "

At 03:29 on April 20th, the trader on the 9th said to others:"We have worked hard for this moment for many years. "

Of the 12 traders charged with Vega Capital in London, Gary Feinerman, a Chicago district judge, is understood to have dismissed charges against four traders who did not appear in chat records, saying the evidence was insufficient to link them to the alleged conspiracy. London Vega Capital itself and its owners are also temporarily off the hook, and the company is seen as just a market maker.

For the remaining eight traders, the US judge ruled that the charges were reasonable based on conversations and "highly relevant transactions".

It is reported that Mish must revise its complaint and re-fill in the rejected part by April 28th.

Earlier, the Commodity Futures Trading Commission (Commodity Futures Trading Commission), the US regulator, analyzed the reasons for the collapse in WTI prices on April 20, 2020, but did not come to a conclusion, according to the Financial Times.

Bank of America Corporation trader admits to manipulating the price of US bonds

Let's take a look at another financial manipulation case.

Taylor Forbes (Tyler Forbes), a former trader at Bank of America Corporation Merrill Lynch, appeared in Eastern District Court in New York on April 15 and admitted that the prices of Treasuries that manipulated secondary market trading between January 2019 and June 2019 mainly included two-year and three-year Treasuries, as well as 10-year Treasuries, according to CCTV Finance.

Taylor Forbes, 27, from New York, places a large number of electronic orders on one side of the market but does not execute them, and then places smaller orders on the other side to form beneficial prices and increase profits, according to the Justice Department website. Prosecutors believe that Taylor Forbes' operation is fraudulent in nature, and that its actual order is only "partially visible" to the market at a specific time, while the news of "false order" is completely public.

The US Department of Justice said in a public statement that the purpose of Forbes' use of "false orders" was to create a false appearance of market activity, to mislead other traders and to artificially raise or depress current market prices. to make it easier to execute their real orders or make more profits.

Prosecutors point out that deception usually involves placing a large number of trading orders into the derivatives market that were not intended to be executed to induce others to push prices in their desired direction. While it is not illegal to submit an order and then cancel it, it is illegal as part of a strategy designed to deceive other traders.

Forbes pleaded guilty to one count of manipulating securities prices, the exact sentence will be announced on July 28, and is expected to face up to 20 years in prison.

According to public sources, Forbes began working at Bank of America Corporation in 2016 after graduating from Colgate University (Colgate University). He was involved in 194 frauds, according to a document submitted to the US Financial Regulatory Authority, a Wall Street self-regulator.

Bank of America Corporation fired Forbes in August 2019 for failing to comply with the bank's trading rules, according to the Financial Industry Regulatory Authority. Last September, the Financial Industry Regulatory Authority suspended Forbes from practice and fined him $75000.