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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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Catch of the Week: Bank of Nova Scotia Fined for Commodities Fraud and False Statements to Investigators

Posted  08/21/20
building of a bank
Self-disclosure offers wrong-doing corporations a path to leniency: Fess up, the government says, and we’ll go easier on you.  But as the Bank of Nova Scotia learned, you had better reveal the full extent of the problem, or you are just making your problem worse. The Bank had made a self-disclosure that secured it's leniency and an $800,000 deal for charges of commodities fraud.  When the CFTC later determined...

August 19, 2020

The Bank of Nova Scotia (Scotiabank) has been ordered to pay $127.4 million to the CFTC and $60.4 million in criminal fines, forfeiture, and restitution to the DOJ for attempting to manipulate prices and spoofing in precious metals futures contracts, making false and misleading statements to investigators, and failing to comply with swap dealer conduct and supervision requirements.  The alleged misconduct occurred over the eight years ending in 2016 and involved four precious metals traders in New York, London, and Hong Kong.  From the penalty paid to the CFTC, a record-breaking $42 million will go toward resolving the price manipulation and spoofing allegations, and a record-breaking $17 million will go toward resolving the false and misleading statements allegations.  In addition to the fines, Scotiabank has entered into a deferred prosecution agreement and agreed to retain an independent monitor.  CFTC; DOJ; USAO NJ 

August 4, 2020

New York Mercantile Exchange (NYMEX) and former employees William Byrnes and Christopher Curtin have been ordered to pay a $4 million civil monetary penalty for violating the Commodity Exchange Act (CEA) and CFTC regulations.  Between 2008 and 2010, while employed at NYMEX, Byrnes and Curtin repeatedly disclosed material non-public information to commodities broker and defendant Ron Eibschutz.  Byrnes’ and Curtin’s liability is capped at $300,000 and $200,000, respectively, and they are permanently banned from trading commodity interests and registering with the CFTC.  This is the first time the CFTC has charged an exchange with such violations.  CFTC

What Potential Whistleblowers Need to Know About the Dodd-Frank Act

Posted  07/21/20
This week marks the tenth anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act. What is the Dodd-Frank Act? Passed following the 2008 financial crisis, the Dodd-Frank Act aims to prevent fraud and abuse in the financial markets. For whistleblowers, the Dodd-Frank Act is especially significant, as it also created the SEC Whistleblower Program and CFTC Whistleblower Program. The Dodd-Frank...

July 21, 2020

Two unidentified whistleblowers will share a whistleblower reward totaling $1 million.  While the underlying enforcement action is not identified, the CFTC disclosed that information from the first whistleblower caused it to open an investigation, and information from the second whistleblower, who participated in the underlying scheme, significantly contributed to the investigation.  CFTC

July 10, 2020

Perfection PR Firm LLC (PPR) and owner Joshua Christian McDonald have been ordered to pay $360,565 in restitution and $935,907 in civil monetary penalty for committing fraud, misappropriating customer funds, and operating without proper registration.  While running an off-exchange foreign currency (forex) trading scheme, the defendants solicited $440,000 from 12 customers by promising them growth in value of 10-50% per month.  However, most or all of the funds that were not lost in trades were eventually transferred to McDonald.  CFTC

July 6, 2020

The CFTC has simultaneously filed and resolved charges against Illinois-based Foremost Trading LLC and its principal, Mark Miller.  According to the orders, Miller misappropriated customer funds and caused over 500 unauthorized and fictitious trades in proprietary accounts he owned with family and a customer account over which he had trading authority.  In addition to being suspended from trading for two years and permanently barred from future registration with the CFTC, Miller will pay a $250,000 civil penalty.  Together with Foremost, which will separately pay a $200,000 civil penalty, Miller will pay almost $725,000 in restitution.  CFTC

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
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