1. Legal Framework

United States:

• Wire Fraud 18 USC 1343, Commodities Fraud, Sherman Act
• Commodity Exchange Act Sec 6c(a)(5)(C) - Spoofing
• Dodd-Frank: Spoofing is criminal with up to 10 years
• Bank plea + Deferred Prosecution Agreement (DPA)

UK:

• Financial Services Act 2012 Sec 89-91 - criminal market manipulation
• Conspiracy to Defraud - Common Law
• UK MAR 596/2014 - prohibits actual and attempted market manipulation and such conduct may also constitute a criminal offence under sections 89 to 91 of the Financial Services Act 2012

India:

• SEBI Act Sec 12A - prohibits fraudulent and unfair trade practices, such as round-tripping, circular trading
• SEBI (PFUTP) Regulations 2003 Reg 3,4
• Sec 15HA - civil penalty up to Rs 25 cr or 3x profit
• Sec 24 - Criminal Prosecution with imprisonment up to 10 years and steep fines for fraudulent or manipulative conduct. SEBI has confirmed Violations attract severe civil consequences and, in grave cases, criminal prosecution under Section 24, with imprisonment up to ten

2. Banking Cases - Case Law

A. LIBOR / EURIBOR Rigging - The Biggest Criminal Banking Case

Banks submitted false rates to benefit their derivatives books.

R v Tom Hayes (Southwark Crown Court 2015, UK) - First SFO prosecution. Hayes, ex- UBS/ Citi trader: Between 2006-2010, agreed to manipulate Yen LIBOR in order to advance his own trading interests, the profits of the bank. Convicted of conspiracy to defraud, 14 years reduced to 11 on appeal. Confiscation order followed.

R v Jonathan Mathew, Jay Merchant, Alex Pabon (Barclays) 2016 - SFO announced convicted by a jury at Southwark Crown Court of conspiracy to defraud for manipulation of the US Dollar LIBOR. The three individuals are all former employees of Barclays Bank Plc, which was fined £59.5m by the FCA. Barclays employees fixed the London interbank rate between June 2005 and August 2007.

Christian Bittar (Deutsche Bank) 2018 - convicted in 2018 of conspiracy to defraud by manipulating the Euribor and Libor.

Landsmark reversal 2025: UK Supreme Court in 2025 quashed Hayes and Bittar. Then Court of Appeal in London quashed the criminal convictions of five former financial traders for manipulating the Libor and Euribor interest rate benchmarks. Former Barclays employees Merchant, Matthew and Pabon had convictions overturned because LIBOR definition allowed commercial consideration - guilty plea was founded on fundamental errors of law.

US Corporate pleas:

• Rabobank - Entered agreement with DOJ to pay a $325 million penalty to resolve violations arising from Rabobank's submissions for LIBOR... charges Rabobank with wire fraud for its role in manipulating the benchmark interest rates LIBOR and Euribor
• Lloyds Banking Group - Admits Wrongdoing... Agrees to Pay $86 Million Criminal Penalty - DOJ said traders at Lloyds manipulated the bank's LIBOR submissions for three currencies to benefit the trading positions

B. FX Rigging 2015 - Parent Banks Plead Guilty Criminally

• US v JPMorgan, Citigroup, Barclays, RBS (FX Cartel) - Five big US, UK banks face criminal charges and $5 billion bill over FX rigging - U.S. banks JPMorgan and Citigroup and Britain's Barclays and Royal Bank of Scotland are expected to plead guilty to criminal charges with the U.S. Department of Justice related to forex manipulation . First time main banking arms pleaded guilty as criminal felons.

C. Precious Metals Spoofing - JPMorgan 2008-2016

Spoofing = placing fake orders with intent to cancel before execution to create false impression of supply/demand.

• US v Gregg Smith, Michael Nowak, et al (JPMorgan) - Convicted of Fraud, Attempted Price Manipulation, and Spoofing in a Multi-Year Market Manipulation Scheme . DOJ statement: those who seek to manipulate our public financial markets will be held accountable . Court documents: Systematic manipulation 2008-2016 (8 YEARS)... Tens of thousands of deceptive trading sequences . JPMorgan admitted to wire fraud September 2020, $920 million dollar fine - largest CFTC spoofing penalty EVER. Smith 2 years prison, Nowak 1 year.

DOJ noted: With this verdict, the Department has secured convictions of 10 former traders at Wall Street financial institutions, including JPMorgan, Merrill Lynch & Co., Deutsche Bank AG, The Bank of Nova Scotia, and Morgan Stanley. Two Deutsche Bank AG traders convicted of spoofing in 2020 were each sentenced to a year in prison.

D. India

SEBI v B. Ramalinga Raju (Satyam Scam 2009) - SEBI conducted independent investigation under SEBI Act, 1992, especially the PFUTP Regulations, 2003... findings confirmed that Raju... had knowingly falsified accounts and misled shareholders. Violated Section 12A of the SEBI Act and Rule 3 and 4 of the PFUTP Regulations. Criminal prosecution under Sec 24 + IPC 420, 467.

SEBI v Jane Street (2025-26) - SEBI to Consider Criminal Charges Against Jane Street for Alleged Market Manipulation under Section 24 of the SEBI Act, 1992 — a clause that allows up to 10 years of imprisonment. Allegation: manipulation of Bank Nifty expiry.

PFUTP principles: SAT has held - Even small gains made through misuse of confidential information amount to market manipulation and fraud - front-running case violating Section 12A(a), (b), (c) and Reg 3(a)-(d), 4(1) and 4(2)(q) of PFUTP.

3. Elements Prosecutor Must Prove (Criminal)

1. Actus Reus: False submission, fake order, wash trade, circular trade creating misleading appearance of demand and artificially pushed up stock price, violating Section 12A
2. Mens Rea: Intent to induce others, or reckless disregard
3. Materiality & Causation: Price moved, counterparties disadvantaged
4. For Banks: Respondeat superior - trader's intent attributed if within scope + failure of controls

4. Sentencing Trend

UK originally heavy (14 years), now quashed - moving to regulatory failure. US - heavy on banks ($5bn FX, $920m JPMorgan), prison for traders (1-2 years typical). India - moving from civil to criminal - Sec 24 + PMLA - When SEBI initiates criminal prosecution under Section 24... it may trigger jurisdiction of the ED under PMLA