How Flatiron’s “Spoofing” Rigged the Financial Market

Imagine you are playing a poker game. You think it’s fair. Suddenly, you realize one player has a hidden device. It tells him exactly what cards you are holding. He isn’t winning because he’s better. He is winning because he is cheating.

That’s essentially what happened in our financial markets. A man named Brett Falloon and his company, Flatiron Futures Traders, were the cheaters.

Their victims weren’t sitting at a poker table. They were everyday people. Their victims were retirement funds, small-time investors, and anyone else who believes in a fair market. Every dollar Falloon made by cheating was a dollar someone else lost unfairly.

The Corporate Playbook: How the Harm Was Done

Falloon’s scheme was a deceptive practice called “spoofing”. It’s a simple idea at heart. He wanted to buy or sell futures contracts for himself. These are called his “Genuine Orders”. To get a better price, he needed to trick other people in the market.

Here’s how he did it. Let’s say he wanted to sell something. He would first place his real sell order on the market. Then, he would place huge orders to buy the same thing. These buy orders were fake. He never intended for them to go through. He planned to cancel them all along. These were his “Spoof Orders”.

Other traders saw these huge buy orders. They thought, “Wow, someone really wants to buy! The price must be about to go up.” This false signal of demand tricked them into acting. Their reaction allowed Falloon’s real sell order to get filled faster or at a better price.

Once his real trade was complete, poof. He would cancel the giant fake orders. The illusion vanished. But the money was already in his pocket. He was a ghost in the machine, manipulating reality for his own gain.

A Cascade of Consequences: The Real-World Impact

This wasn’t a one-time trick. Falloon did this over 400 times between May and December 2022. He placed more than 1,900 fake orders in total. The size of his deception was enormous. His fake orders were, on average, five times larger than his real ones.

Economic Ruin and the Erosion of Trust

The damage here is twofold. First, there is direct financial harm. Every time Falloon’s trick got him a better price, it forced another market participant to take a worse one. This is a direct transfer of wealth from honest players to a dishonest one. We don’t know who was on the other side of these trades. It could have been a pension fund manager trying to secure a teacher’s retirement. It could have been a small business owner hedging against risk. They were playing by the rules, but the game was rigged against them.

Second, and perhaps more importantly, this behavior shatters public trust. Our entire economic system is built on a fragile idea: that markets are mostly fair. Spoofing attacks the very foundation of that trust. It sends a message that the market is a playground for insiders who know how to exploit its complexity. When people believe the game is rigged, they stop playing. This withdrawal has real consequences, making it harder for honest businesses to raise capital and for regular people to build wealth.

A System Designed for This: Profit, Deregulation, and Power

Let’s be clear. Brett Falloon is not some uniquely evil genius. He is a product of an economic system—neoliberalism—that worships profit above all else.

For decades, we’ve been told that deregulation and freeing up the markets would create prosperity for everyone. Instead, it created a jungle. A place where predators with the fastest technology and the loosest morals can thrive.

Falloon and his company, Flatiron, were never even registered with the government’s regulatory body, the CFTC. He was the company’s only trader. He operated in the shadows, exploiting the very system that is supposed to be the engine of our economy. This here be a feature of late-stage capitalism. Our economic system’s complexity and speed create countless opportunities for this kind of behavior.

The singular goal is profit. The method is irrelevant. Falloon’s actions were the logical endpoint of a system that tells you to win at all costs.

Dodging Accountability: How the Powerful Evade Justice

So what happened to Falloon and Flatiron? Was justice served? Not really. They were ordered to stop, of course. Falloon was banned from trading for a whole twelve months. And they had to pay a civil penalty of $200,000.

I’m being deadass here. A $200,000 fine for manipulating major financial markets hundreds of times. For a successful trader, this isn’t a punishment. It’s a business expense. It’s the cost of getting caught. The document doesn’t say how much he made, but it’s easy to imagine it was far more than the fine.

Crucially, he didn’t have to admit he did anything wrong. As part of the settlement, he neither admitted nor denied the findings.

This is a common legal trick for corporations and the powerful. It allows them to avoid true accountability. They pay a fee, promise not to do it again, and walk away with their reputation largely intact. There are no criminal charges. No jail time. Just a financial slap on the wrist. This outcome sends a clear message: if you have enough money, justice is just another transaction.

Reclaiming Power: Pathways to Real Change

This story should make us angry. But it should also make us demand change. A one-year trading ban and a fine that amounts to a rounding error are not solutions. They are a rubber stamp on a broken system.

Real change would mean treating financial crime like the real crime it is. It would mean criminal prosecutions and real jail time for individuals who intentionally rig our economy. It would mean fines that don’t just cover the cost of misconduct but actually claw back every penny of illicit profit and then some. Systemic reform is also necessary.

We must simplify financial markets to eliminate the dark corners where predators like Falloon can hide. We need to strengthen regulatory bodies and give them the power to issue lifetime bans, not temporary time-outs.

Conclusion: A Story of a System, Not an Exception

The story of Brett Falloon and Flatiron Futures Traders is a perfect example of the failures of neoliberalism and late-stage capitalism. Our economic system is designed to produce these outcomes. It prioritizes private profit over public good, complexity over transparency, and speed over fairness.

Falloon was just a player taking advantage of the rules laid out before him. Until we change the rules of the game itself, there will always be another Brett Falloon waiting in the wings, ready to rig the system for his own benefit while the rest of us pay the price.

All factual claims and figures in this article were derived from the public document: CFTC Docket No. 25-07, “In the Matter of: Brett Falloon, Flatiron Futures Traders, LLC, Respondents,” dated September 9, 2025.

Here is a press release on the CFTC website about Flatiron Futures getting sanctioned: https://www.cftc.gov/PressRoom/PressReleases/9118-25

As always, Bloomberg Law was my go to website to find out about this act of corporate malfeasance. Click here to read their article about it: https://news.bloomberglaw.com/banking-law/cftc-sanctions-colorado-trader-for-futures-spoofing-on-cme

And where Bloomberg Law goes, LexisNexis is sure to follow. Check out their article on this same financial misconduct by visiting https://www.law360.com/articles/2386166/cftc-fines-colo-trader-over-futures-market-spoofing-claim