Read this section of transcript from CFTC Technical Advisory Committee meeting on July 14, 2010. As far as we know, no one has ever been named nor has there been any follow-up to find out.
Starting at bottom of page 204:
MICHAEL COSGROVE: Well, I became aware of a paper just yesterday that was produced by a group called NANEX, and it's photocopied and handed out to everyone this afternoon. I had intended to, if I had a little more time, to send this in.
I didn't author this work and I don't know these guys, but I read the paper, and I was fascinated, because I've been in energy and commodity markets for nearly 30 years, and I've certainly seen many variations of gaming of various markets, and I've been trying to figure out for the last week or so how you can game a market using high frequency trading, notwithstanding the flash business, which I think is a separate issue. And in this NANEX paper, they've highlighted something that they call "stuffing fingerprints," where someone appears to be generating a high degree of orders that they explain as quite probably meant to jam up competing algorithmic traders. And so they essentially generate a large volume of orders and then program their own algorithms to disregard those orders so that they can process the normal market information, but at the same time, those who don't have that information are now processing an enormous amount of spurious information that does nothing but slow them down.
And so there is -- I mean if you look at this, I think it's fascinating, they name some great names like Bayonet and Crystal Pyramid and so forth. And if this, in fact, true, then I think somebody ought to find out exactly who generated this and get an explanation of why, because I mean, clearly, this isn't metaphysical, somebody produced those, and it's possible to find out who it is, and I'd love to find out who it is and sit them down and say, what is this and what's the commercial purpose.
And I think that, if nothing else, it would scare the heck out of people who might otherwise be tempted to promulgate those kinds of strategies. So this is the first example that I've seen, you know, where it was something other than the kind of extension of behavior that you would see with locals who are going to go run through stops on a quiet afternoon, or, you know, spoof some guy across the ring who is short and sweating, and this is the first thing that I've seen that seems to be more than a simple extension of the kind of stuff that we've seen in the rings for 30 years.
So I think -- if we don't find out who did that, I think it's one of the biggest crimes of the year. I mean somebody did that, let's see who it is and ask them why they did it.
CFTC CHAIRMAN O'MALIA: Andrei, do you want to speak to that?
ANDREI KIRILENKO (CFTC Chief Economist): NANEX representatives who were here left Thursday, they presented their views to -- in this very room, a room full of our enforcement, surveillance and economist staff, and staff from the Securities and Exchange Commission. We're taking their research very, very seriously. They provided us with all the data that they have on this day. We are supplementing this data with the identities data, and the SEC is doing the same. We're looking into it very, very seriously, I should assure you.
MR. COSGROVE: I'd love to know what you find out.
MR. KIRILENKO: It might be a federal felony for me to tell you.
MR. COSGROVE: We'll talk about it later.
RICHARD GORELICK (RGM Advisors): Yeah, I would just agree with those comments. I mean if someone was doing that for a manipulative purpose, then there should be an enforcement action.
MR. COSGROVE: Yeah, let's go get them.
The "bayonett' pattern referred to in the text above (we called it the Knife, link to others).