In this latest scrutiny of computerized trading across financial markets, both U.S. and U.K. regulators have accused a New Jersey high-speed trader of manipulating commodities markets in 2011. While the U.S. Commodity Futures Trading Commission (CFTC) has charged Panther Energy Trading LLC and its owner Michael J. Coscia of disrupting markets by improperly placing trades, the U.K. Financial Conduct Authority (FCA) has fined Coscia for deliberate manipulation of commodities markets. According to the Wall Street Journal report, Tracey McDermott tried to attract other investors into buying and selling futures contracts tied to corn, oil and other commodities at bogus price levels.  

The report indicates that this is the first time regulators have taken such an action. In fact, to go after such unethical practices, the CFTC is using new enforcement powers that have been given under the Dodd-Frank financial law, wrote WSJ reporters Scott Patterson and Jamila Trindle.

As per this report, the CFTC fined Panther Energy $1.4 million, and is asking the trader to pay back another $1.4 million in profits from the improper trades. Similarly, the FCA has fined Coscia $903,176. The FCA's director of enforcement and financial crime Tracey McDermott told the WSJ that "Coscia was cheating the market and other participants."

Although, the high-speed trader has agreed to pay the fines with a one-year trading ban, it has not admitted or denied the wrongdoing. The report says that Panther Energy refused to make any comments on these charges through its attorney Richard Reibman, a partner at Thompson Coburn LLC.

According to the reporters, the regulators are concerned about the risks presented by computerized trading with the ability to weaken market integrity.

The CFTC enforcement chief David Meister told WSJ that the agency plans to use the Dodd-Frank disruptive-practices law "against schemes like this one to protect market participants and promote market integrity, particularly in the growing world of electronic trading."

Because computerized trading has gone global, the U.S. regulators are joining forces with  overseas regulators to investigate suspect trading practices. For example, Wall Street's self-regulatory body, the Financial Industry Regulatory Authority, and Britain's Financial Services Authority recently joined hands to examine suspect trading practices by now-defunct day-trading firm Swift (News - Alert) Trade Inc.