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CFTC Enforcement Actions

					
The Commodity Futures Trading Commission (CFTC) is the United States agency with primary responsibility for enforcing the Commodity Exchange Act (CEA) and regulating commodity futures and related markets. Whistleblowers with knowledge of violations of laws and regulations enforced by the CFTC can submit a claim under the CFTC Whistleblower Reward Program, and may be eligible to receive a monetary reward and protection against retaliation by employers.


Below are summaries of recent CFTC settlements or successful enforcement actions. If you believe you have information about fraud which could give rise to a CFTC enforcement action and claim under the CFTC Whistleblower Reward Program, please contact us to speak with one of our experienced whistleblower attorneys.

				

			

			
						
					
			

	
		
		

			

				
				
October 1, 2019

				 Six financial institutions, each registered or provisionally-registered swap dealers, have been ordered to pay penalties to the CFTC for their failure properly report swap data to a swap data repository as required, and/or for their failure to adequately supervise in connection with swap data reporting.  HSBC Bank USA, N.A. will pay a $650,000 fine;  Société Générale International Limited will pay a $2.5 million fine; The Northern Trust Company will pay a $1 million fine; NatWest Markets Plc will pay  $850,000; The Bank of New York Mellon will pay $750,000, and PNC Bank, National Association will pay $300,000.  CFTC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 1, 2019

				 RBC Capital Markets, LLC, a registered futures commission merchant and subsidiary of the Royal Bank of Canada, will pay $5 million to resolve charges by the CFTC that RBC engaged in improper, fictitious, exchange for physical wash transactions (Wash EFPs), despite an earlier consent order between RBC and the CFTC regarding wash sales and fictitious transactions.  In the present action, the CFTC also found that RBC failed to meet its supervisory obligations, resulting in its failure to detect at least 385 Wash EFPs.  CFTC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 1, 2019

				 Matthew D. Webb of Houston, Texas, and his employer, broker Classic Energy LLC, will pay over $1.5 million to resolve charges that Webb used material, nonpublic information from Classic customers to make trades in Webb's proprietary trading account.  In addition, Webb failed to disclose to Classic customers that he was acting not only as a broker, but also as a trading counterparty.  Classic Energy was also found to have multiple supervision and recordkeeping failures.  CFTC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Insider Trading, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			


 			




	
		
		

			

				
				
October 1, 2019

				 Three firms will pay a total of $3 million to resolve claims that each violated the Commodity Exchange Act's prohibition on spoofing.  Morgan Stanley Capital Group Inc. will pay $1.5 million for engaging in spoofing the precious metals futures markets; Belvedere Trading LLC will pay $1.1 million for engaging in spoofing in the Chicago Mercantile Exchange E-mini S&P 500 futures market; and, Mitsubishi International Corporation will pay $400,000 for acts of spoofing silver and gold futures on the Commodity Exchange, Inc. markets.  CFTC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Market Manipulation and Trading Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 30, 2019

				 Hard Eight Futures, LLC and its principal Igor Chernomzav have been ordered to pay $2.5 million in civil monetary penalties based on findings that the defendants placed bids and offers for E-mini futures contracts with the intent to cancel those orders before execution.  When placed and prior to cancellation, the bids and offers constituted a substantial percentage of the best bid or offer, creating a false impression of buying and selling interest.  CFTC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Market Manipulation and Trading Violations, 
												
						

					
	
							
	
		
		
	


 			


 			




	
		
		

			

				
				
September 16, 2019

				 Heraeus Metals New York LLC and its employee John Lawrence have been ordered by the CFTC to pay a total of $1.03 million for their actions in spoofing orders for precious metals futures.  Between 2017 and 2018, Lawrence placed hundreds of large orders in the COMEX silver and gold futures markets with the intent to cancel the orders before execution.  Lawrence intended that these larger spoofed orders would attract market participants to fill smaller, genuine, orders that he had also placed.  CFTC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Market Manipulation and Trading Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 13, 2019

				 Tullett Prebon Americas Inc., an interdealer broker and CFTC-registered introducing broker, has been ordered to pay $13 million to resolve charges that the firm failed to supervise its brokers on the U.S. Dollar Medium Term Interest Rate Swaps Desk and prevent them from making false and misleading statements to customers.  In addition, the CFTC found that Tullett failed to take adequate corrective action when management learned of the problem, and that its brokers made false and misleading statements during a CFTC investigation.  CFTC				 					 

						
Tagged in:
													  Fraud in CFTC-Regulated Markets, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 12, 2019

				 Rafael Marconato of Brazil, the former chief compliance officer of a registered commodity pool operator and commodity trading advisor, has been ordered to pay $150,000 to resolve allegations that he made misstatements to the National Futures Association about the actions of his employer, Phy Capital Investments LLC, f/k/a Phynance Capital Management LLC, and its CEO Fabio Bretas de Freitas, who were accused of misappropriating client funds.  CFTC				 					 

						
Tagged in:
													  Fraud in CFTC-Regulated Markets, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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