UNITED STATES OF AMERICA 


Before the 


COMMODITY FUTURES TRADING COMMISSION 


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In the Matter of: 

Arab Global Commodities DMCC 

Respondent. 

CFTC Docket No. 18-01 

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 


SECTION 6(c) AND 6(d) OF THE COMMODITY EXCHANGE ACT, 


MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS 


I. 

The Commodity Futures Trading Commission ("Commission") has reason to believe that 

Arab Global Commodities DMCC ("AGC" or "Respondent") violated Section 4c(a)(S)(C) ofthe 

Commodity Exchange Act ("Act" or "CEA"), 7 U.S.C. § 6c(a)(S)(C) (2012), from at least March 

to August 2016 (the "Relevant Period"). Therefore, the Commission deems it appropriate and in 

the public interest that public administrative proceedings be, and hereby are, instituted to 

determine whether Respondent engaged in the violations set forth herein and to determine whether 

any order should be issued imposing remedial sanctions. 

II. 

In anticipation ofthe institution of an administrative proceeding, Respondent has 

submitted an Offer of Settlement ("Offer") that the Commission has determined to accept. 

Without admitting or denying any ofthe findings or conclusions herein, Respondent consents to 

the entry ofthis Order Instituting Proceedings Pursuant to Section 6( c) and 6( d) ofthe Commodity 

Exchange Act, Making Findings, and Imposing Remedial Sanctions ("Order") and acknowledges 

service ofthis Order. 1 

1 Respondent consents to the entry ofthis Order and to the use ofthese findings in this proceeding and in any other 

proceeding brought by the Commission or to which the Commission is a party; provided, however, that Respondent 

does not consent to the use ofthe Offer or the findings or conclusions in this Order consented to in the Offer, as the 

sole basis for any other proceeding brought by the Commission, other than a proceeding in bankruptcy or to enforce 

the terms ofthis Order. Nor does Respondent consent to the use ofthe Offer or this Order, or the findings or 

conclusions in this Order consented to in the Offer, by any other party in any other proceeding. 

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III. 

The Commission finds the following: 

A. SUMMARY 

From at least March to August 2016, one or more AOC traders engaged in the disruptive 

practice of"spoofing" (bidding or offering with the intent to cancel the bid or offer before 

execution) with respect to Copper futures contracts traded on the Commodity Exchange, Inc. 

("CO MEX"). This spoofing conduct violated Section 4c(a)(5)(C) ofthe Act, 7 U.S.C. 

§ 6c(a)(5)(C) (2012). Moreover, AOC failed to implement adequate policies and procedures to 

monitor its employees' trading for spoofing, and failed to respond adequately to a warning 

concerning spoofing by an AOC trader ("Trader A") from its Futures Commission Merchant 

("FCM"). 

B. RESPONDENT 

Arab Global Commodities DMCC ("AOC") has been incorporated with the Dubai Multi 

Commodities Centre since 2005. AOC is a registered Broker and Clearing Member of Dubai 

Gold and Commodity Exchange ("DOCX"). AOC maintains offices in Dubai, as well as in 

several cities in India. It has never been registered with the Commission in any capacity. 

C. FACTS 

AOC is a proprietary trading firm that utilized algorithmic and manual trading strategies. 

During the Relevant Period, AOC employed approximately 25 traders, including at least one 

trader, Trader A, who engaged in spoofing on the COMEX Copper futures market. Trader A 

generally spoofed after business hours, when Trader A traded from home. Trader A repeatedly 

used the same spoofing pattern: (1) place a small order (generally less than 10 lots) on one side of 

the book, generally one or two levels away from the best bid/offer; (2) shortly thereafter, place a 

large order or a series orders (generally more than 100 lots) on the other side of the book, with the 

intent to cancel those orders before execution; and (3) once the smaller order is filled in whole or 

in part, cancel the large orders resting on the opposite side of the book before those orders could 

be filled. 

Trader A deployed this spoofing strategy regularly during the Relevant Period. In certain 

instances, it appears that Trader A was using another AOC trader's account to hide Trader A's 

spoofing. 

Prior to the Relevant Period, AOC did not have an anti-spoofing policy, nor did it train its 

traders or managers with respect to the CEA and exchange prohibitions against spoofing. During 

the Relevant Period, AOC did not monitor Trader A's COMEX trading, and therefore did not 

detect Trader A's spoofing. Furthermore, although AGC's FCM relayed its suspicions to one of 

AGC's branches, the issue was not effectively elevated to AGC decision-makers, with the result 

that AOC did not adequately address the issue until it was notified by the Chicago Mercantile 

Exchange ("CME") that CME had commenced an investigation. AOC promptly terminated 

Trader A. 

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In accepting AGC's Offer, the Commission recognizes AGC's assistance during the 

investigation. In addition, the Commission notes that AOC resolved the matter with the 

Commission at an early stage ofthe investigation and proactively implemented remedial measures 

and processes to deter similar misconduct in the future, including implementing significant 

structural, compliance, and policy measures, as well as updating its training to reflect the 

prohibition against spoofing. 

IV. 

LEGAL DISCUSSION 

A. Section 4c(a)(5)(Cl of the Act-Spoofing Violations 

Section 4c(a)(5)(C) ofthe Act, 7 U.S.C. § 6c(a)(5)(C) (2012), makes it unlawful for "[a]ny 

person to engage in any trading, practice, or conduct on or subject to the rules of a registered 

entity that ... is, is ofthe character of, or is commonly known to the trade as, 'spoofing' (bidding 

or offering with the intent to cancel the bid or offer before execution)." See also United States v. 

Coscia, No. 16-3017, 2017 WL 3381433, at *7 (7th Cir. Aug. 7, 2017) (holding that because the 

CEA clearly defines spoofing, it provides adequate notice ofprohibited conduct). As described 

above, Trader A entered into multiple bids or offers on a registered entity with the intent to cancel 

the bids or offers before execution, in violation of Section 4c(a)(5)(C) ofthe Act. See, e.g., CFTC 

v. Oystacher, 203 F. Supp. 3d 934, 942 (N.D. Ill. 2016) (denying motion for judgment on the 

pleadings, holding that allegations of placing "both bids and offers with the intent to cancel those 

bids or offers before execution" constitutes "trading behavior [that] falls within the Spoofing 

Statute's defined prohibition."); CFTC v. Nav Sarao Futures Limited PLC, No. 15-CV-3398, 2016 

WL 8257513, at *10 (N.D. Ill. Nov. 14, 2016) (consent order) (finding that defendants engaged in 

spoofing techniques by, among other things, "plac[ing] tens ofthousands of bids and offers for the 

E-Mini S&P contract with the intent of cancelling those bids and offers before execution (i.e., 

Spoof Orders) ..."); CFTC v. Khara, No. 15-CV-03497, ECF 35 at 6 (S.D.N.Y. Mar. 31, 2016) 

(consent order) (finding that "Defendants ... engaged in unlawful disruptive trading practices or 

conduct in the gold and silver futures markets ... that were, were ofthe character of, or were 

commonly known to the trade as 'spoofing' (bidding and offering with the intent to cancel the bid 

or offer before execution)."); In re Posen, CFTC No. 17-20, 2017 WL 3216576, at *2 (July 26, 

2017) (manual trader "entered into thousands of bids or offers on a registered entity with the intent 

to cancel the bids or offers before execution in violation of Section 4c(a)(5)(C) ofthe Act"). 

B. Respondent AGC Is Liable for the Acts of Its Agents 

Section 2(a)(l)(B) ofthe Act, 7 U.S.C. § 2(a)(l)(B) (2012), and Commission Regulation 

("Regulation") 1.2, 17 C.F .R. § 1.2 (2016), provide that the act, omission, or failure of any 

official, agent, or other person acting for any individual, association, partnership, corporation, or 

trust within the scope of his employment or office shall be deemed the act, omission, or failure of 

such individual, association, partnership, corporation, or trust. Under Section 2(a){l)(B) and 

Regulation 1.2, principals are strictly liable for the actions oftheir agents. See, e.g., Rosenthal & 

Co. v. CFTC, 802 F.2d 963, 966 (7th Cir. 1986) ("[W]e have no doubt that section 2(a)(l) imposes 

strict liability on the principal ... , provided, of course, as the statute also states expressly, that the 

agent's misconduct was within the scope or (equivalently but more precisely) in furtherance ofthe 

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agency."); Dohmen-Ramirez & Wellington Advisory, Inc. v. CFTC, 837 F.2d 847, 857-58 (9th Cir. 

1988) ("We agree with the reasoning of the Seventh Circuit that because the language ofsection 

2(a)(l) expressly imputes the agent's wrongdoing to the principal, it imposes strict liability."). 

Trader A engaged in the conduct described herein within the course and scope ofTrader 

A's employment at AOC. Therefore, AOC is liable for the acts, omissions and failures ofTrader 

A, as described above, that constituted violations of Section 4c(a)(5)(C) of the Act. 

v. 

FINDINGS OF VIOLATIONS 

Based on the foregoing, the Commission finds that AOC violated Section 4c(a)(5)(C) of 

the Act, 7 U.S.C. § 6c(a)(5)(C) (2012). 

VI . 


.OFFER OF SETTLEMENT 


AOC has submitted an Offer in which it, without admitting or denying the findings and 

conclusions herein: 

A. 	 Acknowledges receipt of service ofthis Order; 

B. 	 Admits the jurisdiction ofthe Commission to all the matters set forth in this Order 

and for any action or proceeding brought or authorized by the Commission based 

on a violation of or enforcement of this Order; 

C. 	 Waives: 

(1) 	 the filing and service of a complaint and notice of hearing; 

(2) 	 a hearing; 

(3) 	 all post-hearing procedures; 

(4) 	 judicial review by any court; 

(5) 	 any and all objections to the participation by any member ofthe 

Commission's staff in the Commission's consideration of the Offer; 

(6) 	 any and all claims that it may possess under the Equal Access to Justice 

Act, 5 U.S.C. § 504 (2012) and 28 U.S.C. § 2412 (2012), and/or the rules 

promulgated by the Commission in conformity therewith, Part 148 ofthe 

Regulations, 17 C.F.R. pt. 148 (2017), relating to, or arising from, this 

proceeding; 

(7) 	 any and all claims that it may possess under the Small Business Regulatory 

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Enforcement Fairness Act of 1996, Pub. L. No. 104-121, §§ 201-53, 110 

Stat. 847, 857-74 (codified as amended in scattered sections of 5 U.S.C. and 

15 U.S.C.), relating to, or arising from, this proceeding; and 

(8) 	 any claims of Double Jeopardy based upon the institution ofthis proceeding 

or the entry in this proceeding of any order imposing a civil monetary 

penalty or any other relief; 

D. 	 Stipulates that the record basis on which this Order is entered shall consist solely of 

the findings contained in this Order to which AOC has consented in the Offer; and 

E. 	 Consents, solely on the basis of the Offer, to the Commission's entry of this Order 

that: 

(1) 	 makes findings by the Commission that AOC violated Section 4c(a)(5)(C) 

ofthe Act, 7 U.S.C. § 6c(a)(5)(C) (2012); 

(2) 	 orders Respondent to cease and desist from violating Section 4c(a)(5)(C) of 

the Act; 

(3) 	 orders Respondent to pay a civil monetary penalty in the amount ofthree 

hundred thousand U.S. dollars ($300,000), plus post-judgment interest; and 

(4) 	 orders the Respondent and its successors and assigns to comply with the 

conditions, and representations consented to in the Offer and as set forth in 

Part VII ofthis Order. 

Upon consideration, the Commission has determined to accept the Offer. 

VII. 

ORDER 

Accordingiy, IT IS HEREBY ORDERED THAT: 

A. 	 Respondent shall cease and desist from violating Section 4c(a)(5)(C) of the Act, 7 

U.S.C. § 6c(a)(5)(C) (2012). 

B. 	 Civil Monetary Penalty 

1. 	 Respondent shall pay a civil monetary penalty in the amount ofthree hundred thousand 

U.S. dollars ($3QO,OOO) (the "CMP Obligation"). Ifthe CMP Obligation is not paid in full within 

ten days ofthe date of entry of the Order, then post-judgment interest shall accrue on the CMP 

Obligation beginning on the date of entry ofthe Order and shall be determined by using the 

Treasury Bill rate prevailing on the date of entry ofthe Order pursuant to 28 U.S.C. § 1961 

(2012). 

2. 	 Respondent shall pay the CMP Obligation by electronic funds transfer, U.S. postal money 

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order, certified check, bank cashier's check, or bank money order. Ifpayment is to be made other 

than by electronic funds transfer, Respondent shall make the payment payable to the Commodity 

Futures Trading Commission, and sent to the address below: 

Commodity Futures Trading Commission 

Division ofEnforcement 

ATTN: Accounts Receivables 

DOT/FAAIMMAC/AMZ-341 

CFTC/CPSC/SEC 

6500 S. MacArthur Blvd. 

Oklahoma City, OK 73169 

(405) 954-7262 office 

(405) 9?4-1620 fax 

nikki.gibson@faa.gov 

Ifpayment is to be made by electronic transfer, Respondent shall contact Nikki Gibson or her 

successor at the above address to receive payment instructions and shall fully comply with those 

instructions. Respondent shall accompany payment ofthe CMP Obligation with a cover letter that 

identifies Respondent and the name and docket number of this proceeding. Respondent shall 

simultaneously transmit copies ofthe cover letter and the form of payment to the Chief Financial 

Officer, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, 

Washington, D.C. 20581. 

C. 	 Respondent shall comply with the following conditions and undertakings set forth 

in the Offer: 

1. Public Statements: Respondent agrees that neither it nor any ofits successors, assigns, 

agents or employees under their authority or control shall take any action or make any public 

statement denying, directly or indirectly, any findings or conclusions in this Order, or creating, or 

tending to create, the impression that this Order is without a factual basis; provided, however, that 

nothing in this provision shall affect Respondent's (i) testimonial obligations; or (ii) right to take 

legal positions in other proceedings to which the Commission is not a party. 

2. Cooperation with the Commission: Respondent shall cooperate fully and expeditiously 

with the Commission, including the Commission's Division ofEnforcement, in this action, and in 

any current or future Commission investigation or action related thereto. Respondent shall also 

cooperate in any investigation, civil litigation, or administrative matter related to, or arising from, 

the subject matter ofthis action. As part of such cooperation, Respondent agrees to: 

a. 	 preserve and produce to the Commission in a responsive and prompt manner, as 

requested by the Division's staff, all non-privileged documents, information, and other 

materials wherever located, in the possession, custody, or control of Respondent; that 

are related to the subject matter of this proceeding; 

b. 	 accept service by mail, electronic mail, or facsimile transmission of notices or 

subpoenas for documents; and 

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c. 	 waive the territorial limits on service contained in Rule 45 ofthe Federal Rules of Civil 

Procedure and any applicable local rules in connection with requests or subpoenas of 

the Division's staff. 

3. Partial Satisfaction: Respondent understands and agrees that any acceptance by the 

Commission of any patiial payment of Respondent's CMP Obligation shall not be deemed a 

waiver of its obligation to make fmiher payments pursuant to this Order, or a waiver of the 

Commission's right to seek to compel payment of any remaining balance. 

4. Change ofAddress/Phone : Until such time as Respondent satisfies in full its CMP 

Obligation as set forth in this Consent Order, Respondent shall provide written notice to the 

Commission by certified mail of any change to its telephone number and mailing address within 

ten (I 0) calendar days ofthe change. 

The provisions of this Order shall be effective on this date. 

By the Commission, 

Dated: October l 0, 2017 

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