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CFTC slaps Chicago trading firm with $5 million fine – Crain's Chicago Business

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DV Trading, a Chicago firm that’s been expanding lately, will pay $5 million to settle charges that several of its traders engaged in illegal trading strategies.

The high-speed trading firm, formerly a part of futures broker Rosenthal Collins Group, reached an agreement with the Commodity Futures Trading Commission to pay the civil monetary penalty because of illegal activity by three traders between 2013 and 2015, according to an order today from the CFTC, which oversees futures trading.

The traders engaged in “wash” trades in which they were trading with themselves, or each other, instead of other parties, to grab rebates for orders offered by Chicago-based exchange operator CME Group. They were trading in the Eurodollar market. Wash trades are harmful because they “create illusory price movements in the market,” the CFTC said.

DV Trading said in a statement that it’s pleased to have resolved the matter, and noted that it’s built a new, better compliance program now. “Since becoming an independent entity in September 2016, DV Trading has focused on building a strong infrastructure and culture of compliance,” the statement said.

DV Trading has been on an expansion spree over the past couple years, taking on a group of traders recently from the shuttered Chicago firm Eldorado Trading, and separately opening a London office. The firm, led by co-founder and CEO Jared Vegosen, has about 275 employees, including 200 in Chicago.

One of the three traders, Brandon Elsasser, who has since left DV Trading, will also pay a $200,000 penalty, the CFTC said in the statement. Renato Mariotti, a lawyer for Elsasser and one of the traders, said they were pleased to put the matter to rest.

“As the CFTC noted, we fully cooperated with their investigation, and we are glad that they took this into account,” said Mariotti, a former federal prosecutor who joined Thompson Coburn in Chicago last year.

His clients were based in Chicago, but the third was not, he said. His clients now work for Hehmeyer, another Chicago trading firm. He declined to name the other traders.