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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.

September 10, 2019

Merrill Lynch, Pierce, Fenner & Smith Inc. has been ordered to a pay the CFTC a $300,000 civil monetary penalty for failing to promptly produce records in response to routine regulatory requests and for failing to supervise its employees to ensure statutory and regulatory obligations were met.  Merrill’s delay substantially stalled a CFTC investigation.  CFTC

September 9, 2019

The CFTC has simultaneously filed a complaint and settled charges against a CFTC registrant, Nathan Harris, who was charged with committing fraud, trading without authorization, and violating speculative position limits in live cattle futures contracts between 2012 and 2014.  Harris has been ordered to pay $1.25 million for causing customer losses of $10.3 million.  CFTC

September 4, 2019

Chicago-based Options Clearing Corporation (OCC), the registered clearing agency for exchange-listed option contracts on equities, will pay $15 million in penalties to the SEC and $5 million in penalties to the CFTC to resolve allegations that it failed to comply with regulations related to clearing agency standards.  As a systemically important financial market utility (SIFMU), OCC is subject to SEC and CFTC regulations regarding the implementation and management of risk management systems, to reduce the risk of disruption in OCC's operations, and allegedly failed to comply with those standards, including through changing policies without obtaining SEC approval.  SEC; CFTC

August 15, 2019

Kraft Foods Group and Mondalēz Global LLC have been ordered to pay a $16 million penalty for allegedly manipulating the wheat market in the summer of 2011.  Defendants’ orders for wheat futures contracts worth $90 million resulted in false demand signals, and accomplished the actual goal of defendants, which was to narrow the price spread on wheat futures, and lower cash wheat prices.  Defendants were able to earn more than $5 million in profits.  CFTC

August 9, 2019

In a default judgment, Kevin Andre Perry and Lucrative Pips Corporation of Atlanta, Georgia were ordered to pay a civil penalty of $2 million and restitution of almost $700,000 with respect to their fraudulent marketing of a foreign exchange pool.  Defendants told prospective pool participants that their funds were “guaranteed” against trading losses and that their accounts would grow in value by 200% to 350% in less than 60 days.  Defendants then failed to return funds when customers tried to later withdraw them.  CFTC

July 19, 2019

Kelvin Ramirez of Houston, Texas, was ordered to pay more than $2.9 million – $2.2 million as a civil penalty, and $736,000 in restitution – in a default judgment that also permanently barred him from trading in any CFTC-regulated market or registering with the CFTC.  Ramirez solicited clients through social media platforms, offering bogus forex trading schemes.  CFTC

July 18, 2019

Swapnil Rege, who worked as a portfolio manager for a hedge fund that operated as a commodity pool operator, was been ordered by the CFTC  and SEC to pay a $100,000 civil penalty and disgorge a $600,000 performance bonus he received as a result of his fraudulent mismarking the valuations of interest rate swaps.  The mismarking, accomplished through various means, artifically inflated the profitability of his trades, earning him a larger performance bonus.  SEC, CFTC

July 12, 2019

Korea Exchange, Inc., based in Busan, Korea, will pay $150,000 and implement financial management standards in settlement of charges by the CFTC that the company falsely certified to the Commission that it was in compliance with specified international financial management standards and testing requirements.  KRX had made the certification in order to maintain its exemption from certain registration requirements.  CFTC

July 1, 2019

Two whistleblowers have been jointly awarded $2 million for their significant contributions to the CFTC.  In addition to coming forward and providing numerous interviews and documents, the whistleblowers also reported the violations to another agency, which conducted its own investigation and shared its findings with the CFTC.  CFTC

June 25, 2019

Merrill Lynch Commodities, Inc. (MLCI) has agreed to pay $25 million for spoofing and manipulating the precious metals market on the Commodity Exchange from 2008 to 2014.  In the non-prosecution agreement signed with DOJ, MLCI admitted that its employees had placed thousands of fraudulent orders to create a false sense of demand and induce other market participants to make purchases or sales.  CFTC, DOJ
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