Somewhere out there, hunched in front of a Bloomberg terminal at the precious metals desk of a large global bank, sits a Legend. He may not have the recognition he deserves, but within a clique of fellow futures traders, his name is synonymous with the fine art of spoofing. Many have seen him in action. Others have been lucky enough to have received his guidance. Few, if any, are his equal.
Of course, we can't tell you what this dude's name is. Neither, apparently, can the feds, at least not yet. So far, the Legend is just an anonymous cast member in the saga of David Liew, the former Deutsche Bank trader and life skills coach who pleaded guilty to spoofing-related charges last week. The details, however, are titillating:
In his court plea, Liew described working with others at his own bank and at two other operations. He refers to “The Legend,” without naming him, at another unidentified global bank. Many details are cloaked...
After trading silver futures on March 29, 2011, Liew wrote to the trader he called The Legend. "Look at silver … all algo play … basically I sold out … by just having fake bids," according to chats transcribed in the FBI affidavit.
The Legend isn't the only character with whom Liew discusses the finer points of placing and subsequently cancelling large numbers of futures orders for the purpose of juking prices and trading on the dislocation. Two Deutsche Bank colleagues allegedly showed him the ropes; others subsequently learned from Liew. There are peers and rivals at other institutions. There's a “Master,” who may be one of the DBers and may be the Legend and may be someone else entirely.
The whole milieu actually seems like a pretty vibrant community, like a quilting club but for profiting off the manipulation of precious metals prices. Recall, for example, the spoofing academy for junior traders that Citigroup allegedly ran. This isn't just a few aberrant rogues jamming buttons in shadowy isolation. There's something of a fraternity here.
Thankfully, the identity of the Legend probably won't go unrecognized for too much longer. The Liew case is an initial volley in an investigation that has ensnared close to a dozen banks. Soon enough, we can assume, the Legend will get his due. We look forward to learning his ways. If we're worthy.