Showing posts with label CBOT. Show all posts
Showing posts with label CBOT. Show all posts

Monday, April 6, 2015

CFTC CHARGES TWO COMPANIES WITH MANIPULATION OF WHEAT FUTURES AND CASH WHEAT PRICES

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION
April 1, 2015
CFTC Charges Kraft Foods Group, Inc. and Mondelēz Global LLC with Manipulation of Wheat Futures and Cash Wheat Prices

CFTC also charges violations of position limits and noncompetitive trading

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement Complaint in the U.S. District Court for the Northern District of Illinois against Kraft Foods Group, Inc. and Mondelēz Global LLC, headquartered in Northfield and Deerfield, Illinois, respectively, for manipulation and attempted manipulation of the prices of cash wheat and wheat futures. The Complaint also alleges that Kraft and Mondelēz violated speculative position limits by holding wheat futures positions in excess of speculative position limits established by the CFTC and the Chicago Board of Trade (CBOT) without a valid hedge exemption or a bona fide hedging need, and engaged in numerous noncompetitive trades in CBOT wheat.

Aitan Goelman, the CFTC’s Director of Enforcement, stated: “This case goes to the core of the CFTC’s mission: protecting market participants and the public from manipulation and abusive practices that undermine the integrity of the derivatives markets. A market participant who is not happy with cash prices available to it may not resort to manipulative trading strategies in an attempt to artificially lower that price.”

According to the CFTC Complaint, in response to high cash wheat prices in late Summer 2011, Kraft and Mondelēz developed, approved, and executed in early December 2011 a strategy to buy $90 million of December 2011 wheat futures, which amounted to a six-month supply of wheat. The CFTC Complaint alleges that Kraft and Mondelēz never intended to take delivery of this wheat and instead executed this strategy expecting that the market would react to their enormous long position by lowering cash wheat prices and strengthening the spread between December 2011 wheat and March 2012 wheat futures. Those price shifts did occur and, according to the CFTC Complaint, Kraft and Mondelēz earned over $5.4 million in profits.

The CFTC Complaint also alleges that on five dates in early December 2011, Kraft and Mondelēz held long positions in December 2011 wheat that exceeded the CBOT’s 600-contract speculative spot month position limit by as much as 2,110 contracts without having a valid hedge exemption in place or a bona fide need for that quantity of wheat.

Finally, the CFTC Complaint alleges that beginning in or about 2003 and continuing through January 2014, prior to each of the five annual delivery periods for CBOT wheat, Kraft and Mondelēz conducted off-exchange futures transactions between two separate corporate trading accounts that did not comply with exchange rules for noncompetitive, off-exchange futures trades.

In its continuing litigation against Kraft and Mondelēz, the CFTC seeks a permanent injunction from future violations of federal commodities laws, disgorgement, and civil monetary penalties.

The CFTC staff members responsible for this case are Division of Enforcement staff Robert Howell, Jennifer E. Smiley, Joseph Patrick, Susan Gradman, Scott Williamson, and Rosemary Hollinger, and Division of Market Oversight staff David Amato, Gene Kunda, and Jerry Lavin.

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Monday, October 6, 2014

COURT ORDERS MAN TO PAY $1.56 MILLION FOR ATTEMPTING TO MANIPULATE WHEAT FUTURES MARKET

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 
October 1, 2014

Federal Court Orders Eric Moncada to Pay $1.56 Million Penalty for Attempting to Manipulate the Wheat Futures Market

Order Finds that on Multiple Trading Days, Moncada Entered and Canceled Orders He Never Intended to Fill

Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court Consent Order against Defendant Eric Moncada, finding that Moncada attempted to manipulate the wheat futures markets on numerous occasions and imposing a $1.56 million civil monetary penalty and trading and registration restrictions. In July 2014, the court had issued an Order granting the CFTC summary judgment on charges that Moncada entered into fictitious sales and non-competitive transactions (see Order under Related Links).

The Court’s Orders arise out of the CFTC enforcement Complaint, filed on December 4, 2012 in the U.S. District Court for the Southern District of New York, charging Moncada and proprietary trading firms, BES Capital LLC (BES) and Serdika LLC (Serdika), with attempting to manipulate the price of the Chicago Board of Trade (CBOT) #2 Soft Red Winter Wheat Futures Contract on eight days in October 2009 and with entering into fictitious sales and non-competitive transactions on four days in October 2009 (see CFTC Press Release and Complaint 6441-12).

CFTC Director of Enforcement Aitan Goelman stated: “The Commission remains committed to protecting the integrity of the markets by prosecuting manipulative conduct of all forms, including the type of conduct engaged in by Moncada – the wholesale entering and cancelling of orders without the intent to actually fill the orders.”

According to the Consent Order, Moncada’s scheme was to electronically enter and immediately cancel numerous large-lot orders for CBOT wheat futures that he did not intend to fill. By such activity, Moncada intended to create a misleading impression of rising liquidity in the marketplace. The Order further finds that Moncada would then seek to take advantage of any price movements that may have resulted from this manipulative scheme by placing smaller orders, which he hoped to fill at prices beneficial to him, on the opposite side of market from his large-lot cancelled orders.

Specifically, in addition to the civil monetary penalty, the Order prohibits Moncada from trading any wheat futures products for a period of five years and prohibits Moncada from trading in any futures product or registering in any capacity with the CFTC for a period of one year.

On March 5, 2014, the court entered a default judgment Order against BES and Serdika, which included civil monetary penalties totaling $32.24 million and permanent trading and registration bans (see Order under Related Links).

The CFTC Division of Enforcement staff members responsible for this action are Andrew Ridenour, Jennifer Diamond, Jessica Harris, Erica Bodin, Elizabeth Davis, Rick Glaser, and Richard Wagner, as well as former Division of Enforcement staff Kenneth McCracken and Brian Walsh.

Sunday, September 23, 2012

BIG BANK PAYS FINE FOR VIOLATING WHEAT FUTURES SPECULATIVE POSITION LIMITS

Photo From: Wikimedia
FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
September 21, 2012

CFTC Orders Citigroup Inc. and Citigroup Global Markets Ltd. to Pay $525,000 Penalty for Violating Wheat Futures Speculative Position Limits

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and settling charges that Citigroup Inc. (Citigroup) of New York, N.Y., and Citigroup Global Markets Ltd. (CGML) of London, England, exceeded speculative position limits in wheat futures contracts in trading on the Chicago Board of Trade (CBOT), which is part of CME Group, Inc. The CFTC order requires Citigroup and CGML to pay a $525,000 civil monetary penalty and cease and desist from further violations of section 4a(b)(2) of the Commodity Exchange Act and CFTC regulation 150.2, as charged.

The CFTC order finds that on several occasions in December 2009, Citigroup, via two of its wholly owned subsidiaries, including CGML, held aggregate net long positions in the wheat contract traded on the CBOT in excess of the CFTC’s all months speculative position limits. Additionally, on one or more days in December 2009, CGML individually held net long positions in wheat contracts that exceeded the all months speculative position limits established by the CFTC, the order finds. The position limit for CBOT wheat was 6,500 contracts for all months combined.

CFTC Division of Enforcement staff members responsible for this case are Michael R. Berlowitz, Trevor Kokal, David Acevedo, Jeremy Cusimano, Lenel Hickson, Jr., Stephen J. Obie, and Vincent A. McGonagle.

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