BofA Unit Fined $24M in Treasuries Spoofing Case

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BofA Unit Fined $24M in Treasuries Spoofing Case

In a decisive move by the Financial Industry Regulatory Authority (FINRA), Bank of America’s securities unit, BofA Securities Inc., has been slapped with a $24 million fine. This penalty comes in the wake of allegations that two former traders engaged in extensive spoofing activities in U.S. Treasury secondary markets.

The Spoofing Scandal: Hundreds of Deceptive Trades

According to a recent FINRA document, two unnamed individuals, a supervisor and a junior trader at BofA Securities, reportedly engaged in over 700 instances of spoofing between October 2014 and February 2021. Spoofing, an illegal tactic, involves placing and then intending to cancel trade orders to manipulate market prices for personal gain.

Lapses in Supervision: FINRA’s Allegations Against BofA Securities

FINRA’s investigation revealed that from October 2014 to September 2022, BofA Securities failed to establish an adequate system to detect spoofing in U.S. Treasury markets. Notably, the unit lacked any system to catch such activities until November 2015 and didn’t adapt it to spot manual spoofing by traders until mid-2019. Furthermore, the unit’s surveillance failed to monitor orders on certain external systems until at least December 2020, and it did not oversee possible cross-product spoofing activities through September 2022.