Accused by CFTC of creating `appearance of false market depth'

Chicago futures trader racked up spoofing fines of $660,000

Before he gained notoriety, Igor Oystacher was known as 990.

That was the identification code assigned to the firm where he worked in 2004, when the head trader at Chicago-based Kingstree Trading LLC noticed something he'd never seen before in the Standard & Poor's 500 futures market. He watched again and again as 990 ran over everyone in what he called an unprecedented display of market manipulation. The head trader alerted an executive at the firm to the practice, according to both men, who asked not to be identified by name for fear of reprisal.

By the end of that year, 990 was being cursed all over Chicago. Angry traders took to Internet message boards to rant. They petitioned the Chicago Mercantile Exchange to stop whomever it was. Word spread that the tag belonged to Gelber Group LLC, a proprietary-trading shop that had hired a Russian whiz kid who dropped out of Northwestern University.

This week, 11 years after that rude introduction, the U.S. Commodity Futures Trading Commission filed a civil complaint against Oystacher and his current firm 3Red Trading LLC for cheating on some of the world's biggest futures exchanges, the latest attempt to stamp out a form of price manipulation known as spoofing.

The CFTC accused Oystacher and 3Red of creating "the appearance of false market depth" to benefit their own interests "while harming other market participants," according to a statement on the agency's website. The spoofing allegedly occurred on the Chicago Mercantile Exchange, the New York Mercantile Exchange, the Commodity Exchange and the Chicago Board Options Exchange, the CFTC said. The complaint didn't include any of Oystacher's activities while at Gelber.

Flash Crash

The action is the third high-profile case brought by U.S. authorities in the past year as they crack down on a type of trading only defined and outlawed in 2010. Navinder Singh Sarao was indicted in August for alleged spoofing that helped spark the May 2010 flash crash, which temporarily wiped out almost $1 trillion from the value of U.S. equities.

"The charges are completely without merit