Market prices for commodities and futures should reflect the forces of supply and demand. Unfortunately, large banks and other traders sometimes manipulate the prices for commodities and futures in order to maximize their profits. When they do so, other investors are financially injured and often require legal assistance to recover their unwarranted losses.
Handley Farah & Anderson vigorously pursues claims against traders that have violated the Commodity Exchange Act, which prohibits the manipulation of the prices of commodities and futures contracts. Our lawyers pursue such claims on behalf of injured investors around the country. Our experienced lawyers are gifted at investigating and uncovering complex forms of manipulation and transforming the evidence into viable legal claims.
Forms of Commodity Manipulation
Unlawful “manipulation” of commodities prices can take many forms. As the U.S. Court of Appeals for the Eighth Circuit explained in Cargill Inc v. Hardin, “The methods and techniques of manipulation are limited only by the ingenuity of man.” Some of the more common forms of manipulation include:
- Cornering: A party acquires the total supply of a financial instrument and then dictates the market prices of that instrument.
- Front Running: A party, frequently a broker, executes a trade with advance, non-public knowledge of a forthcoming transaction that will impact the market.
- Wash Trading: A party executes sham orders with the goal of creating artificial movements in volume and price.
- Pumping and Dumping: A party acquires a position in a financial instrument and then artificially inflates the price of that instrument through fraudulent promotion before selling it.
- Benchmark Distortion: A party manipulates a benchmark that is determinative of the price of a financial instrument.
- Pinging: A party submits and cancels a large number of small orders for a financial instrument to induce others in the marketplace to react and disclose their trading intentions.