A unit of UBS Group AG was accused in a New York lawsuit of using deceptive spoof orders to manipulate the shares of a software company that worked on Donald Trump’s 2020 reelection campaign.
(Bloomberg) — A unit of UBS Group AG was accused in a New York lawsuit of using deceptive spoof orders to manipulate the shares of a software company that worked on Donald Trump’s 2020 reelection campaign.
Phunware Inc., based in Austin, Texas, sued UBS Securities LLC Tuesday in federal court in Manhattan, alleging it “deliberately engaged in repeated spoofing that interfered with the natural forces of supply and demand” from January 2021 to March 2023, and repeatedly drove the shares lower.
UBS placed “baiting orders” that were never intended to be executed and had “no legitimate economic purpose” other than to create a “false illusion of market interest,” Phunware said in its complaint. UBS quickly canceled those sell orders and executed buy orders once prices fell, the software company said.
Phunware “sold over 34 million shares at manipulated prices as a result of defendant’s actions,” causing “significant losses” from “artificially depressed prices,” according to the suit.
UBS didn’t immediately respond to requests for comment on the suit.
Spoofing was made illegal in the Dodd-Frank Act of 2010 in response to the growth of high-speed algorithms that could execute trades in less time than it takes to blink.
UBS, Deutsche Bank AG and HSBC Holdings Plc in January 2018 agreed to pay about $50 million to settle civil claims of manipulating precious metals futures markets, while eight people were charged. A UBS precious metals trader, Andre Flotron, was found not guilty in 2018 of scheming to manipulate futures markets with spoofing trades.
Phunware, which went public in 2018, built an app for Trump’s 2020 campaign that allowed his staff to communicate with his supporters. The company earlier this month announced plans to cut about 33% of its work force in a series of cost saving measures. The shares have fallen more than 76% in the past 12 months.
The case is Phunware Inc. v UBS AG, 23-cv-6426, US District Court, Southern District of New York.
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