Federal Court Orders Foreign Trader to Pay $390K for Fictitious Sales Scheme

WASHINGTON, D.C.- The Commodity Futures Trading Commission today announced U.S. District Judge Sherilyn Peace Garnett, Central District of California, granted, in relevant part, the CFTC's motion for default judgment and entered final judgment against Yueyu Bao, a Chinese citizen, for engaging in a fictitious sales scheme.

The court's July 31 and Aug. 20 orders require Bao to pay a $260,140 civil monetary penalty and to disgorge $130,070 in ill-gotten gains. The orders also impose a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations, ban Bao from trading in any CFTC-regulated markets and from registering with the CFTC.

The court's orders resolve the CFTC's enforcement action against Bao. [See CFTC Press Release No. 8848-24]

Case Background

The orders stem from a CFTC complaint filed Jan. 16, and find that, in October and November 2021, Bao engaged in a series of illegal transactions on the Chicago Board of Trade involving 33 non-competitive, fictitious sales of 410 futures contracts. Through this illegal scheme, Bao coordinated the transfer of $130,070 from the account of his cousin, "Trader A," to his own account.

Bao and Trader A worked in tandem, closely coordinated their trading, and synchronized their fictitious sales by communicating about their bids and offers. Bao and Trader A intentionally entered orders during periods of low overall trading volume with the express purpose of finding and matching each other's orders on the Chicago Board of Trade's Globex platform. Bao intentionally engaged in this trading activity that lacked both price competition and market risk for the sole purpose of passing funds from Trader A's account to Bao's account. By engaging in this conduct, he violated the fictitious sales provisions of the CEA and CFTC regulations.

The CFTC thanks the CME Group for its assistance in this investigation.

Division of Enforcement staff responsible for this case are Jennifer Blakley, Dmitriy Vilenskiy, Chrystal Gonnella, Derek S. Hammond, James H. Holl III, A. Daniel Ullman II, and Paul G. Hayeck.