Spoofing and Layering

What this video covers

• The exact definition of spoofing: placing orders with intent to cancel before execution to create false supply or demand, then trading the opposite side at the manipulated price
• How layering operates as a multilevel variant of spoofing across multiple price points to fake depth of market interest
• The legal status of both schemes as prohibited manipulative devices under the Uniform Securities Act (USA) antifraud provisions
• Why a knowing spoofing violation is an explicit federal felony under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
• The critical intent test: legitimate orders canceled due to changed market conditions are not spoofing, but orders never meant to be filled are
• Why layering is not a lesser offense than spoofing despite being a variant, and how the exam tries to trick you into thinking otherwise
• The enforcement chain: how the state administrator refers evidence of willful violations to the attorney general or district attorney for criminal charges