Showing posts with label NYMEX. Show all posts
Showing posts with label NYMEX. Show all posts

Friday, August 8, 2014

CFTC ANNOUNCES $13 MILLION FINE TO BE PAID IN CRUDE OIL FUTURES MARKET MANIPULATION CASE

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 
Federal Court Orders $13 Million Fine in CFTC Crude Oil Manipulation Action against Parnon Energy Inc., Arcadia Petroleum Ltd., and Arcadia Energy (Suisse) SA, and Crude Oil Traders James Dyer and Nicholas Wildgoose
Order Imposes Significant Physical Market Trading Limitations against Companies

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a $13 million civil monetary penalty pursuant to a federal court consent Order against Defendants Parnon Energy Inc. (Parnon) of California, Arcadia Petroleum Ltd. (Arcadia Petroleum) of the United Kingdom, and Arcadia Energy (Suisse) SA (Arcadia Suisse) of Switzerland, and crude oil traders James T. Dyer of Australia and Nicholas J. Wildgoose of the United Kingdom.

The CFTC’s Complaint charged Defendants with manipulation and attempted manipulation of New York Mercantile Exchange (NYMEX) Light Sweet Crude Oil futures contract spreads from January 2008 to April 2008 (see CFTC Press Release and Complaint 6041-11, May 24, 2011).

The consent Order, entered on August 4, 2014, by Judge William H. Pauley III of the U.S. District Court for the Southern District of New York, requires the Defendants to pay a $13 million civil monetary penalty, provides limitations on Parnon’s physical market trading for three years, and requires the companies to maintain records and audio recordings for three years. The Order further requires the companies to engage an independent consultant to evaluate compliance, internal control and risk management policies, procedures, and practices, and to implement any resulting recommendations.

“Through resolution of this litigation, the CFTC is holding accountable market participants who sought to profit by undermining the integrity of the U.S. crude oil markets,” commented CFTC Director of Enforcement Aitan Goelman. “The CFTC will continue to work to ensure the integrity of the markets we are responsible for protecting from manipulation, whether direct or indirect.”

The CFTC’s Complaint alleged that the Defendants, taking advantage of a tight physical market, executed a manipulative trading strategy designed to affect NYMEX crude oil futures contract spreads by knowingly amassing a dominant and controlling position in physical WTI crude oil, which is the primary grade of oil deliverable at Cushing, Oklahoma under the NYMEX futures contract; holding the physical position until after futures expiry with the intent to affect NYMEX crude oil spreads; and selling-off the physical position in a concentrated fashion during a time period known as the “cash window” at a loss. The Complaint further alleged that the Defendants sought to generate profits through their manipulative conduct by buying WTI futures spreads prior to widening the spreads through their manipulation and selling WTI futures spreads prior to dumping their physical WTI crude oil position. The Complaint also charged the Defendants with attempted manipulation of the May/June 2008 spread in April 2008. Defendants Dyer and Wildgoose allegedly directed the manipulative trading.

CFTC Division of Enforcement staff members primarily responsible for this case are Christine Ryall, Elizabeth Davis, Jonathan Robell, John Einstman, Melanie Devoe, Amanda Harding, Sophia Siddiqui, Luke Marsh, Saadeh Al-Jurf, George Malas, Tashieka Taylor, Maura Stavrakis, Joan Manley, and Paul Hayeck.

Saturday, February 23, 2013

NEW YORK MERCANTILE EXCHANGE, INC., CHARGED IN CONNECTION WITH DISCLOSURE OF CUSTOMER TRADES CASE

FROM: U.S. COMMODITY FUTURES TRADING COMMISSION 

CFTC Charges CME Group’s New York Mercantile Exchange and Two Former Employees with Disclosing Material Nonpublic Information about Customer Trades

Washington, DC
– The U.S. Commodity Futures Trading Commission (CFTC) today filed an enforcement action charging the New York Mercantile Exchange, Inc. (CME NYMEX), which is owned and operated by the CME Group, and two former CME NYMEX employees, William Byrnes and Christopher Curtin, with violating the Commodity Exchange Act and CFTC Regulations through the repeated disclosures of material nonpublic customer information over of period of two and one-half years to an outside commodity broker who was not authorized to receive the information.

The CFTC’s Complaint, filed on February 21, 2013, in the U.S. District Court for the Southern District of New York, alleges that Byrnes and Curtin worked on the CME ClearPort Facilitation Desk and were responsible for facilitating customer transactions reported for clearing through the CME ClearPort electronic system. The Complaint alleges that at least from in or about February 2008 to September 2010, Byrnes knowingly and willfully disclosed material nonpublic information about CME NYMEX trading and customers, including about trades cleared through CME ClearPort, to a commodity broker on at least 60 occasions. The Complaint further alleges that between May 2008 and March 2009, Curtin knowingly and willfully disclosed the same type of information to the same commodity broker on at least 16 additional occasions. The nonpublic customer information unlawfully disclosed by Byrnes and Curtin in conversations — often captured on tape — included details of recently executed trades, the identities of the parties to specific trades, the brokers involved in trades, the number of contracts traded, the prices paid, the structure of particular transactions, and the trading strategies of market participants, according to the Complaint.

The Complaint alleges that the CME NYMEX and the two former employees violated the Commodity Exchange Act and CFTC Regulations, which specifically prohibit the disclosures of this type of customer information.

The CFTC’s Complaint also alleges that in July 2009, a market participant complained to CME NYMEX that the participant believed nonpublic information about trades cleared through CME ClearPort had been disclosed by a CME NYMEX employee named "Billy." Although a CME NYMEX Managing Director who investigated the market participant’s complaint identified "Billy" to be William Byrnes, CME NYMEX did not then question Byrnes, and Byrnes’s illegal disclosures continued for over a year, until at least September 2010. Ultimately, CME NYMEX terminated Byrnes’s employment in December 2010 after yet another market participant complained to CME NYMEX about disclosures of nonpublic customer information. Curtin had previously left CME NYMEX voluntarily.

In its continuing litigation, the CFTC seeks civil monetary penalties, trading and registration bans, and a permanent injunction prohibiting further violations of the federal commodities laws, as charged.

CFTC Division of Enforcement staff responsible for this case include Patrick Daly, James Wheaton, David W. MacGregor, Lenel Hickson, Stephen J. Obie, and Vincent A. McGonagle.

Tuesday, March 27, 2012

MAN CHARGED BY CFTC WITH MANIPULATING FUTURES PRICES OF PALLADIUM AND PLATINUM

The following excerpt is from the U.S. Commodity Futures Trading Commission website:
CFTC Charges Joseph F. Welsh III, Former MF Global Broker, with Attempted Manipulation of Palladium and Platinum Futures Prices

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a federal court action in the Southern District of New York chargingJoseph F. Welsh III, of Northport, N.Y., with attempted manipulation of the prices of palladium and platinum futures contracts, including the settlement prices, traded on the New York Mercantile Exchange (NYMEX).  The CFTC complaint alleges that Welsh engaged in this conduct from at least June 2006 through May 2008 and specifically on at least 12 separate occasions.

The complaint charges Welsh with directly attempting to manipulate the palladium and platinum futures prices and with aiding and abetting the attempted manipulations of Christopher L. Pia, a former portfolio manager of Moore Capital Management, LLC, a CFTC registrant.

According to the complaint, while working as a broker at MF Global Inc., Welsh employed a manipulative scheme commonly known as “banging the close.”

Welsh allegedly routinely received market-on-close orders to buy palladium and platinum futures contracts from Pia, either directly or through a clerk, and also allegedly understood that Pia wanted to buy at high prices.  To accomplish that, Welsh intentionally devised and implemented a trading strategy to attempt to maximize the price impact through trading during the two-minute closing periods of the palladium and platinum futures contracts markets (Closing Periods), the complaint charges.

The CFTC complaint also states that to push prices higher, Welsh routinely withheld entering the market-on-close buy orders until only a few seconds remained in the Closing Periods and thereby caused the orders to be executed within seconds of the close of trading.

The CFTC seeks civil monetary penalties, trading and registration bans and a permanent injunction against further violations of the federal commodities laws, as charged.

The CFTC settled related actions against Moore Capital Management LLC’s successor, Moore Capital Management, LP (Moore), and its affiliates and against Pia.  On April 29, 2010, the CFTC issued an order filing and settling charges of attempted manipulation and failure to supervise against Moore and its affiliates.  The CFTC’s order imposed a $25 million civil monetary penalty, restricted Moore’s market-on-close trading in the palladium and platinum futures and options markets for two years and restricted Moore’s registration for three years (see CFTC Press Release 5815-10).

On July 25, 2011, the CFTC issued an order filing and settling charges of attempted manipulation against Pia.  The CFTC order required Pia, among other things, to pay a $1 million civil monetary penalty and permanently bans him from trading during the closing periods for all CFTC-regulated products and permanently bans him from trading CFTC regulated products in palladium and platinum (see CFTC News Release 6079-11).

The CFTC thanks the CME Group, the parent company of the NYMEX, for its assistance.
CFTC Division of Enforcement staff responsible for this case are Melanie Bates, Kara Mucha, James A. Garcia, August A. Imholtz III, Kassra Goudarzi, Jeremy Cusimano, Janine Gargiulo, Stephen Obie, Michael Solinsky, Gretchen L. Lowe, and Vincent A. McGonagle.


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