The U.S. Securities and Exchange Commission (SEC) announced today that former day trader Ryan N. Cole has agreed to pay nearly $358,000 to settle allegations that he engaged in a spoofing scheme to manipulate options markets, generating approximately $234,000 in illegal profits.
In a consent filing submitted Monday in the U.S. District Court for the Eastern District of California, Cole agreed to disgorge nearly $235,000, pay $53,000 in prejudgment interest, and a civil penalty of over $70,000. The settlement resolves the SEC’s market manipulation claims without Cole admitting or denying the allegations.
According to the SEC’s complaint, Cole, while employed at an unidentified financial firm, placed non-bona fide orders in thinly traded options with wide bid-ask spreads. These spoof orders, priced either significantly below the best offer or above the best bid, temporarily narrowed the spread and drew attention from other market participants. Once prices shifted, Cole allegedly executed coordinated immediate-or-cancel orders on a different exchange and then cancelled his spoof orders.
“This practice has long been recognized as an illegal, fraudulent scheme and a form of market manipulation,” the SEC stated.
The SEC further alleged that Cole was aware—or should have been aware—of the illegality of his trading activity. His employment was terminated after providing “short, non-responsive” answers when questioned by his firm about trades indicating spoofing.
The SEC’s litigation team in this matter includes Chary A. Avallone, Andrew McFall, and Seth Nadler. Cole is represented by Ashley Duran of PC Compliance Lawyers PC.
