Shinhan Securities: Is a $212,500 Fine a Real Punishment for $33.5 Million in Improper Trades?

Traders in the world of global finances execute millions of dollars in transactions in the blink of an eye.

At the Korean firm Shinhan Securities Co. Ltd., a trader, known only as “Trader A,” according to a CFTC filing was doing just that, moving vast sums through the American crude oil futures market. On one occasion, at 11:41 in the morning, an order to sell a futures contract was placed.

Less than one second later, an order to buy the exact same contract, at the exact same price, was entered. The two orders met in the market and canceled each other out.

It was a perfect trade. No risk, no loss, no gain. A perfect illusion.

Between March 2023 and February 2024, Shinhan executed 127 such transactions, creating a phantom $33.5 million in trading volume on the New York Mercantile Exchange. This here was a banned practice known as “wash trading,” a form of financial cheating designed to create the appearance of market activity without any of the real-world risk. And it’s a practice that just earned the firm a hefty fine from a top U.S. regulator.

Playing Poker Against Yourself

So what exactly is a “wash sale”? Imagine you’re playing a game of poker, but you’re the only one at the table, playing your own left hand against your right.

You can move a stack of chips from one hand to the other, creating the appearance of a high-stakes game for anyone watching. But in reality, you haven’t won or lost a single dollar. You’ve risked nothing. You’ve just washed your money from one pocket to the other.

That’s precisely what Shinhan’s trader did in the futures market.

The scheme was simple but effective. “Trader A” would place an order to buy a certain number of crude oil futures contracts. Then, often in a matter of seconds, they would place an identical order on the other side of the market to sell the same number of contracts.

By structuring the orders to be near-simultaneous, Shinhan “enhance[d] the likelihood that its buy and sell orders would be filled at the same or similar price,” creating a risk-free, circular transaction.

On 80 occasions, Trader A was on both sides of the trade. On others, the offsetting orders were matched with traders on other desks within Shinhan. The result was always the same: a fictitious sale that negated risk and eliminated the need for genuine price competition.

Why a Phony Trade Matters

Unlike a scam that targets individual investors, wash trading’s victim is the market itself.

Healthy financial markets depend on one simple principle: that prices are set through open and competitive bidding between real buyers and sellers who are all taking on real financial risk. This process is called “price discovery,” and it’s what ensures the price of everything from oil to corn is a true reflection of supply and demand.

Wash sales poison this process. They are noncompetitive trades that inject false information into the market.

They create the illusion of trading volume and liquidity where none actually exists.

For a brief moment, it might look like there’s more interest in buying or selling crude oil than there really is. This fake “noise” can distort the price-discovery process and undermine the integrity of the entire marketplace, making it less fair for every other pension fund, company, and individual investor who is playing by the rules.

The U.S. Commodity Futures Trading Commission (CFTC), the federal agency tasked with policing these markets, considers it a serious violation, which is why they launched an investigation into Shinhan’s activities.

A Pattern of Misconduct: A Timeline of Phantom Trades

Accountability with a Twist

In the end, Shinhan Securities was held accountable. The firm agreed to settle with the CFTC, and as part of the deal, it must cease and desist from this illegal activity and pay a civil monetary penalty of $212,500.

But here’s the twist. That fine, which may seem modest compared to the $33.5 million in phantom trades, came with a discount. The CFTC’s order explicitly states that it recognizes Shinhan’s “excellent cooperation” during the investigation. The firm was “prompt and fulsome” in its responses and provided “in-depth presentations” about its own internal investigation and the steps it was taking to prevent this from happening again.

For this cooperation, Shinhan received a 20% mitigation credit, meaning the original fine would have been significantly higher!

This is a crucial part of the story. The CFTC is sending a clear message to the industry: we will punish you for breaking the rules, but we will reward you for owning up to your mistakes and helping us clean up the mess. It’s a “carrot and stick” approach designed to encourage compliance and transparency.

All factual claims in this article are sourced from the U.S. Commodity Futures Trading Commission’s Order in the matter of Shinhan Securities Co. Ltd., CFTC Docket No. 25-08, dated September 17, 2025.

here is a very brief press release on this story at the CFTC’s website: https://www.cftc.gov/PressRoom/PressReleases/9125-25