Front running

Barclays Capital Trader is Indicted in Massive Front Running Scam

Published on: January 17, 2018 | by Shepherd Smith Edwards & Kantas, LLP

A criminal indictment has been issued against Robert Bogucki, Barclays’ (BARC) ex-foreign exchange operation head in New York. Bogucki, who is a Barclay’s trader but has been on leave since late 2016, is accused of involvement in a scam to bilk one of the bank’s clients by engaging in front-running. This type of activity usually involves using advance knowledge about an upcoming order and trading in a way to profit from this information.

The criminal charges against Bogucki include multiple counts of wire fraud and a single count of conspiracy to commit wire fraud. His indictment alleges that in 2011, the ex-Barclays forex trader improperly used the information provided by Barclays’ client Hewlett-Packard Company prior to a significant trade. HP had retained the bank to execute the forex transaction, which involved $8.3B of forex options, and that was tied to plans to acquire another company.

Bogucki and others allegedly used the information given to them by HP to manipulate the “volatility’s” price so as to lower the price of the company’s options. The alleged fraud is said to have caused HP millions of dollars in losses.

“Volatility” is the metric that impacts forex options. Barclays is accused of making misrepresentations to Hewlett-Packard so as to benefit the bank.

Securities News: Ex- HSBC Executive Found Guilty of Fraud Involving $3.5B Currency Trading & Hedge Fund Sues Barclays For Copper Market Rigging

Published on: October 24, 2017 | by Shepherd Smith Edwards & Kantas, LLP

A federal jury in New York has found Mark Johnson guilty on criminal charges accusing him of front-running involving a $3.5B currency trade. HSBC’s ex-foreign-exchange cash trading global head is the first banker that the US Justice Department charged over forex rate rigging.

Johnson was convicted on eight counts of wire fraud and one count of wire fraud conspiracy, and he reportedly will appeal the verdict. Johnson maintains that he was acting in the best interest of the client involved and he did not do anything wrong or irregular.

According to acting US Attorney in Brooklyn Bridget M. Rohde, Johnson used confidential information given to him by an HSBC client to make trades in an attempt to earn millions of dollars for the bank and himself while costing the client money. He and ex-HSBC European currency trading head Stuart Scott allegedly engaged in front running, which involves making trades based on advanced information about a big market order, with the advanced trades rendering huge profits once the bigger transaction has upped the price. Scott is currently in the UK battling extradition efforts to bring him back to the US.

Dallas Trader is Sentenced in $3.5M Texas Securities Fraud Case Involving Institutional Investors

Published on: May 28, 2015 | by Shepherd Smith Edwards & Kantas, LLP

A Texas man was sentenced to 30 months in prison after pleading guilty to securities fraud. At the time of the fraud, Daniel Lutz Bergin was an equity trader for Cushing MLP Asset Management, which is located in Dallas.

While at the registered investment adviser, Bergin had discretionary assets under management of about $2.5B. He serviced institutional investors and high net worth individuals through portfolio and advisory management services.

However, from 2010 until he was fired in May 2013, Bergin engaged in a front-running scam involving the misuse of inside information when making trades in his wife’s brokerage account. He would use non-public, material data about big orders that he was able to access from Cushing. The information was supposed to be used for making trades on behalf of his clients. Instead, he also used the information to make trades through his wife’s account.

Stock Trader Faces Front Running Charges In Alleged $1.7M Texas Securities Fraud

Published on: June 1, 2013 | by Shepherd Smith Edwards & Kantas, LLP

The SEC has filed Texas securities fraud charges against Daniel Bergin, a Dallas-based Cushing MLP Asset Management LP senior equity trader. Bergin is accused of front running, insider trading, and failing to notify his employer of certain trades.

According to the regulator, Bergin, who was a primary equity trader at the Swank Capital-owned registered investment advisory firm), allegedly made at least $1.7 million in profits in trading securities before making large orders of the same securities for Cushing customers. He purportedly used accounts that were registered in the name of Jacqueline Zaun, his wife, to make the personal trades. The Commission has named her as a relief defendant.

SEC Enforcement Division’s Asset Management Unit Marshall S. Sprung says that Bergin breached clients’ trust by secretly using data about their trades to garner an unfair advantage for himself and make massive profits. (As a Cushing, employee, Bergin had access to information about the trades (and their timing) that the RIA made for clients.