The Commodity Futures Trading Commission levied fines against three European Banks on Friday for “spoofing” the futures markets, including COMEX gold. Six traders were arrested yesterday.

"Spoofing" involves placing buy or sell orders in order to move markets in a desired direction then canceling the orders before they get executed. It is one more tool that HSBC, Deutsche Bank and UBS have been using to rig markets.

The fines, which range from $1.6 million to $30 million, might otherwise have been written off as a cost of doing business for these behemoth banks.

The arrests yesterday could mean this action at least has a chance of serving as a deterrent. Crooked bankers generally sail past the regulators by paying a modest fine (using shareholder money) and rarely grapple with the prospect of prison.

That said, it is way too soon for investors in gold futures to start counting on fair dealing. There are, as usual, a few telltale signs that the action is unlikely to have much effect.

There are no U.S. based banks listed as part of this enforcement action, but that is merely suspicious. What really looks bad is the fact that, once again, no senior bank executives have been charged with a crime.

No matter how often people at these same firms get caught lying, rigging, and defrauding their own clients and investors at large, regulators never manage to pin blame on the top brass.

They have yet to suspend the trading privileges of any major bank.

James McDonald, who became the CFTC’s head of Enforcement last year, gave market participants a pretty good idea of what to expect from the agency – a passive attitude toward enforcement. Reuters summarized his approach this way:

He plans to encourage companies and staff to report their own wrongdoing and cooperate with investigators, a strategy he hopes will make it easier to prosecute more individuals.

With a policy like this, Wall Street banks don’t have much to worry about. Investors looking for a fair shake in precious metals futures markets, on the other hand, don’t have a whole lot to look forward to.