Allston Said to Face CFTC Investigation for Alleged Manipulation

The regulator has subpoenaed CME Group Inc. for information on Chicago-basedAllston, said the person, who asked not to be named because the matter is private. Through an arbitration process at exchange operator CME Group,Allstonwas accused last year by a rival, HTG Capital Partners LLC, of misleading competitors through an illegal practice known as spoofing.

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Allstonhas conducted itself with the highest standards of excellence and integrity, Dave Lundy, a spokesman, said in an e-mailed statement. We look forward to putting this matter to rest. Anita Liskey, a spokeswoman for CME Group, and the CFTCs Steve Adamske declined to comment.

Spoofing has become a growing concern for regulators after the 2010 Dodd-Frank Act made such trading — which involves submitting orders with no intention of filling them, with the goal of swaying prices in a direction favorable to your strategy — illegal.

In the arbitration case, CME Group told HTG thatAllstonwas its counterparty in some Treasuries futures trades that HTG said were conducted unfairly, people familiar with the matter said last year.

It is unfortunate that HTG continues to drag our name and our industry through the mud simply because of its failure to remain competitive, Allstons Lundy said in the statement.

Drew Mauck, an HTG Capital spokesman, declined to comment on Lundys assertions.

Allstonwas co-founded more than a decade ago by futures traders Bob Jordan, Elrick Williams and John Harada. Raj Mahajan, its former chief executive officer, was hired in January by Goldman Sachs Group Inc. as a partner to oversee its dark pool and algorithmic-trading businesses. Carlton Jones, chairman and president ofAllston, took over as CEO.

Last year,Allstonhired Jill Sommers, a former CFTC commissioner, to serve on its board of managers.