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Fraud in CFTC-Regulated Markets

This archive displays posts tagged as relevant to fraud in markets regulated by the Commodity Futures Trading Commission, the CFTC, or governed by the Commodity Exchange Act, the CEA. You may also be interested in the following pages:

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June 18, 2020

Deutsche Bank AG has agreed to pay over $10 million to settle two enforcement matters with the CFTC.  The first matter, settled for $1.25 million, involved numerous instances of spoofing by two Tokyo-based traders of Deutsche Bank Securities Inc. in 2013.  The second matter involved a swap reporting platform outage in 2016 that prevented Deutsche Bank from reporting swap data for five full days, exacerbated existing reporting problems, and ultimately caused new reporting problems, including some that violated a 2015 CFTC order.  To settle that matter, Deutsche Bank will pay $9 million, as well as undergo compliance monitoring.  CFTC

June 9, 2020

An unnamed whistleblower has been awarded $6 million for providing what the CFTC called specific, credible, and timely information that ultimately led to a successful enforcement action.  Since the agency’s whistleblower program was started in 2014, the CFTC has recovered nearly $900 million through whistleblower tips, and has awarded over $110 million to the whistleblowers involved with those recoveries.  CFTC

February 21, 2020

Husam Tayeh of Illinois and his Nevada corporations, Dinar Corps., Inc. and My Monex, Inc., have agreed to pay the CFTC more than $22.6 million in disgorgement and civil monetary penalties after being found liable for violations of the Commodity Exchange Act arising from defendants’ alleged registration violations, misappropriation of investor funds, and fraudulent solicitation of customers to engage in financed retail forex transactions involving Iraqi Dinar and Vietnamese Dong.  To settle a related criminal action, Tayeh has been sentenced to 1 year in prison, ordered to forfeit more than $8 million, and ordered to pay more than $150,000 in restitution to victims.  CFTC

January 27, 2020

Catalyst Capital Advisors LLC and its CEO Jerry Szilagyi will pay more than $10 million -- $8.9 million in disgorgement and 1.6 million in civil monetary penalties -- to resolve claims that they failed to adequately supervise employees including the portfolio manager of Catalyst's Hedged Futures Strategy Fund, Edward Walczak, who was separately charged.   Catalyst and Walczak made materially misleading statements about the risk management strategies employed by the fund, including false statements that stop-loss measures and risk monitoring were in place.  The misrepresentations led investors and investment advisors to believe that the fund was a safer investment than it actually was. CFTC, SEC

January 21, 2020

Australian proprietary trading firm Propex Derivatives Pty Ltd has been ordered to pay $1 million and submit to a deferred prosecution agreement after a former trader, Jiongsheng (Jim) Zhao, was found to have engaged in spoofing on the Chicago Mercantile Exchange E-mini S&P 500 futures market.  His actions caused about $464,300 in market losses over the course of the five year scheme.  CFTC; DOJ

January 10, 2020

Richard Carter of Illinois has been ordered to pay $2.5 million for his role in a $1.76 million commodity pool fraud operated by Blue Guru, LLC.  According to the CFTC, from 2014 to 2018, Carter misrepresented the profitability of the commodity pool to current and prospective customers, while misappropriating customer funds, ignoring customer requests to withdraw, and lying to customers about disbursement issues.  Carter's co-defendant, Mark Slobodnik, was previously ordered to pay about $400,000, while Blue Guru was ordered to pay $7 million.  CFTC

December 19, 2019

The CFTC will pay a $1 million award to an anonymous whistleblower.  The CFTC stated that the whistleblower first provided the information through their employer's internal compliance program to another regulator, and subsequently provided the information directly to the CFTC.  Furthermore, the CFTC stated that the whistleblower was eligible for the award even though they did not identify the exact wrongdoing ultimately charged by the CFTC, because the whistleblower's information led the CFTC directly to evidence in support of the CFTC's claims.  CFTC

November 22, 2019

BGC Financial, L.P., a futures industry voice broker and registered futures commission merchant, has agreed to pay a $3 million civil monetary penalty to resolve CFTC charges that the company did not have an adequate supervisory system and failed to adequately perform its supervisory duties, including with respect to its traditional and block trading futures brokerage businesses. In addition, BGC violated recordkeeping, reporting, and other obligations, and failed to inform the CFTC of investigations by other regulatory entities.  CFTC
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