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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.

				

			

			
						
					
			

	
		
		

			

				
				
March 20, 2018

				 The CFTC announced that Judge Brian J. Davis of the Middle District of Florida has ordered Defendants Maverick International, Inc. (Maverick), and its principals Edward Rubin and Wesley Allen Brown to pay $8,605,274.92 in combined restitution and civil monetary penalties for commodity futures fraud, commodity pool fraud, and related violations of federal commodity laws.  Maverick purportedly maintains offices in Wilmington, Delaware and Rubin resides in Winnabow, North Carolina.  Brown was a resident of North Myrtle Beach, South Carolina, and is currently incarcerated in Florida, serving a seven and one-half year sentence for securities fraud, embezzlement, and other crimes related to the conduct at issue in the CFTC’s action. CFTC				 			
	
		
		
	


 			




	
		
		

			

				
				
March 6, 2018

				 The CFTC announced that the Honorable Jack B. Weinstein of the U.S. District Court for the Eastern District of New York entered a Preliminary Injunction Order against Defendants Patrick K. McDonnell and CabbageTech, Corp. d/b/a Coin Drop Markets (CDM).  The Court’s decision stems from the CFTC’s January 18, 2018 Complaint charging Defendants with fraud and misappropriation in connection with purchases and trading of the virtual currencies Bitcoin and Litecoin (see CFTC Press Release & Complaint 7675-18). CFTC				 			
	
		
		
	


 			




	
		
		

			

				
				
March 5, 2018

				 The CFTC filed a civil enforcement action in the U.S. District Court for the Southern District of New York, charging Lon Olen Friedrichsen of Alton, Iowa, with fraud and failing to register with the CFTC as a Commodity Trading Advisor, as required. Friedrichsen, as alleged, also solicited clients under the names of Lon Kummer and Lon Richardson, but omitted that these were false names. The CFTC’s Complaint alleges that from at least December 16, 2014 through May 24, 2017, Friedrichsen fraudulently solicited clients in New York, New York and throughout the United States by making false statements in violation of the Commodity Exchange Act (CEA). Specifically, the Complaint alleges that Friedrichsen solicited clients for his fraudulent scheme via Craigslist ads, telephone, and e-mail. In these solicitations, the CFTC alleges that Friedrichsen made numerous materially false and misleading statements concerning his trading successes, omitted material facts, guaranteed future trading profits, and prepared false trading statements. CFTC				 			
	
		
		
	


 			




	
		
		

			

				
				
February 12, 2018

				 The CFTC issued an Order filing and simultaneously settling charges against AMP Global Clearing LLC (AMP), a registered Futures Commission Merchant since 2010, for its failure between June 21, 2016 and April 17, 2017 to supervise diligently the implementation of critical provisions in AMP’s information systems security program (ISSP). As a result of this failure, a significant amount of AMP’s customers’ records and information were left unprotected for nearly ten months. In April 2017, as a result of this failure, a third party unaffiliated with AMP (Third Party) accessed AMP’s information technology network and copied approximately 97,000 files, which included customers’ records and information, including personally identifiable information. The Third Party thereafter contacted federal authorities about securing the copied information, and subsequently informed AMP that the copied information had been secured and was no longer in the Third Party’s possession. After becoming aware of the vulnerability and unauthorized access, AMP cooperated with the CFTC and worked diligently to remediate the issue. CFTC				 			
	
		
		
	


 			




	
		
		

			

				
				
February 1, 2018

				 The CFTC issued an Order filing and settling charges against Deutsche Bank Securities Inc. (DBSI) for attempted manipulation of the ISDAFIX benchmark and requiring DBSI to pay a $70 million civil monetary penalty. The CFTC Order finds that over a five-year period, beginning in at least January 2007 and continuing through May 2012 (the Relevant Period), DBSI made false reports and through the acts of multiple traders attempted to manipulate the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a leading global benchmark referenced in a range of interest rate products, to benefit its derivatives positions, including positions involving cash-settled options on interest rate swaps. CFTC				 			
	
		
		
	


 			




	
		
		

			

				
				
January 29, 2018

				 The CFTC announced, in conjunction with the Department of Justice and Federal Bureau of Investigation’s Criminal Investigative Division, criminal and civil enforcement actions against three banks and six individuals involved in commodities fraud and spoofing schemes. The CFTC today issued an Order filing and settling charges against Deutsche Bank AG (DB AG) and Deutsche Bank Securities Inc. (DBSI) (collectively, DB), requiring DB to pay a $30 million civil monetary penalty and to undertake remedial relief. The Order finds that from at least February 2008 and continuing through at least September 2014, DB AG, by and through certain precious metals traders (Traders), engaged in a scheme to manipulate the price of precious metals futures contracts by utilizing a variety of manual spoofing techniques with respect to precious metals futures contracts traded on the Commodity Exchange, Inc. (COMEX), and by trading in a manner to trigger customer stop-loss orders. CFTC				 			
	
		
		
	


 			




	
		
		

			

				
				
January 29, 2018

				 The CFTC issued an Order filing and settling charges against UBS AG (UBS), requiring UBS to pay a $15 million civil monetary penalty and to undertake remedial relief.  The Order finds that from January 2008 through at least December 2013, UBS, by and through the acts of certain precious metals traders on the spot desk (Traders), attempted to manipulate the price of precious metals futures contracts by utilizing a variety of manual spoofing techniques with respect to precious metals futures contracts traded on the Commodity Exchange, Inc. (COMEX), including gold and silver, and by trading in a manner to trigger customer stop-loss orders. CFTC				 			
	
		
		
	


 			




	
		
		

			

				
				
January 29, 2018

				 The CFTC issued an Order filing and settling charges against HSBC Securities (USA) Inc. (HSBC) for engaging in numerous acts of spoofing with respect to certain futures products in gold and other precious metals traded on the Commodity Exchange, Inc. (COMEX). The Order finds that HSBC engaged in this activity through one of its traders based in HSBC’s New York office. The Order requires HSBC to pay a civil monetary penalty of $1.6 million, to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing, and to take specified steps to implement and strengthen their training, systems, and controls to detect and deter spoofing by HSBC personnel in the futures markets. In accepting HSBC’s offer of settlement, the CFTC recognizes the bank’s cooperation during the Division of Enforcement’s investigation of this matter. CFTC				 			
	
		
		
	


 			




	
		
		

			

				
				
January 29, 2018

				 The CFTC today announced the filing of a federal court enforcement action in the U.S. District Court for the Southern District of Texas against Krishna Mohan of New York City, New York, charging him with spoofing (bidding or offering with the intent to cancel before execution) and engaging in a manipulative and deceptive scheme in the E-mini Dow ($5) futures contract market on the Chicago Board of Trade and the E-mini NASDAQ 100 futures contract market on the Chicago Mercantile Exchange. CFTC				 			
	
		
		
	


 			




	
		
		

			

				
				
January 29, 2018

				 The CFTC announced the filing of a federal court enforcement action in the U.S. District Court for the Northern District of Illinois, charging Jitesh Thakkar of Naperville, Illinois, and his company, Edge Financial Technologies, Inc. (Edge), with aiding and abetting spoofing and a manipulative and deceptive scheme in the E-mini S&P futures contract market on the Chicago Mercantile Exchange (E-mini S&P). CFTC				 			
	
		
		
	


 			


											

						

								

									
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