Market Manipulation and Trading Violations

December 26, 2023

A temporary restraining order was issued on December 21 against ArciTerra Companies LLC and its CEO Jonathan M. Larmore, along with Cole Capital Funds LLC, an entity formed by Larmore. Larmore and other charged entities misappropriated more than $35 million from private real estate funds and other investment vehicles to fund his family's lavish lifestyle. In another scheme, Larmore issued a press release from Cole Capital Funds, announcing they were buying 51% of WeWork's minority ownership shares at nine times the current trading price. Not disclosed was that Larmore had purchased more than 72,000 call options in the days prior to the press release. Larmore's intent was to earn a windfall on the options; instead, the press release was delayed so most of the call options expired before he could exercise them. SEC

December 14, 2023

Freepoint Commodities LLC will pay more than $98 million in civil penalties and disgorgement for improperly obtaining and trading on material non-public information. Freepoint paid millions in bribes to government officials in Brazil to obtain highly confidential information related to the purchase and sale of fuel oil. Certain members of Freepoint's oil trading team knew of and took steps to conceal the fraud by using code words, fake names, and private email addresses, all to gain unlawful competitive advantages in oil products trading. DOJ; CFTC

September 12, 2023

Canadian resident George Stubos will pay disgorgement of $5,367,926 and prejudgment interest of $806,108 for his microcap stock investment scheme. Stubos gained control of several thinly traded microcap companies and then lied to investors, brokers, and transfer agents, and convinced them his stock shares were eligible to be publicly traded. In addition to not registering his sales with the SEC and failing to disclose his control over the entities, Stubos also engaged in market manipulation to create demand for his stock. In addition to the disgorgement and interest, Stubos is subject to a penny stock bar and is prohibited from participating in the issuance, purchase, offer, or sale of any security other than for his own personal accounts. SEC

May 24, 2022

Switzerland-based mining and commodity trading firm Glencore International A.G. and an affiliate have agreed to pay over $1.1 billion in criminal penalties and forfeitures, and will plead guilty to violations of the Foreign Corrupt Practices Act and conspiracy to engage in commodity price manipulation.  In addition, the companies will pay over $1.186 billion in civil penalties and disgorgement in settlement with the CFTC.  As part of the criminal plea agreement, Glencore admitted that between 2007 and 2018, it corruptly provided more than $100 million in payments and other things of value to intermediaries for the payment of bribes to officials in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, Brazil, Venezuela, and the Democratic Republic of the Congo.  With respect to the commodity price manipulation scheme, the CFTC found that from as early as 2007 through at least 2018, Glencore sought to increase profits from its physical and derivatives oil products trading by manipulating or attempting to manipulate four U.S. based S&P Global Platts physical oil benchmarks and related futures and swaps.  Criminal fines and forfeitures total over $700 million for the FCPA violations and nearly $486 million for the for the market manipulation violations, which amounts are subject to credits for amounts paid to the CFTC and foreign authorities including the United Kingdom.  The $1.186 billion CFTC resolution will also be reduced, with Glencore receiving credit for payments in the criminal resolutions.  DOJ; USAO SDNY; CFTC

May 19, 2022

Sohrab “Sam” Sharma, Robert Farkas, and Raymond Trapani will disgorge over $40 million for raising more than $32 million from investors in their unregistered ICO of “CTR tokens” through their controlled entity, Centra Tech Inc. The fraudsters made material misrepresentations in their marketing of the tokens, including claiming partnerships with Visa, MasterCard, and The Bancorp; created fake executive bios; misrepresented the company’s viability; and manipulated trading in the tokens to generate interest. The three defendants have been sentenced to imprisonment in addition to the financial penalties levied. SEC

May 13, 2022

Kraft Foods Group, Inc. and Mondelez Global LLC have been ordered to pay $16 million after being found to manipulate the prices of cash wheat and wheat futures, and holding wheat futures positions in excess of speculative position limits established by the CFTC.  The companies allegedly engaged in the scheme in order to lower cash wheat prices after they rose in the summer of 2011.  The misconduct earned the two companies over $5.4 million in profits.  CFTC

December 21, 2021

Financial services firm NatWest Markets Plc has pleaded guilty to charges related to its manipulation of the market for U.S. Treasury futures contracts and for the purchase and sale of U.S. Treasury securities in the secondary (cash) market.  NatWest will pay approximately $35 million in criminal fines, restitution, and forfeiture.  The government charged that NatWest traders engaged in spoofing by placing orders with the intent to cancel those orders before execution in order to artificially push up or down the prevailing market price.  DOJ; USAO CT

October 21, 2021

The CFTC has issued a final award of nearly $200 million to a whistleblower whose information significantly contributed to government investigations resulting in successful enforcement actions by the CFTC, another U.S. federal regulator, and a foreign regulator.  In making the award, the CFTC noted that the information provided by the whistleblower was specific and credible, leading to important, direct evidence of wrongdoing, as well as voluntarily provided and timely, even though the CFTC already had an open investigation at the time of the whistleblower’s report.  The CFTC had first issued a preliminary order denying the individual’s application; the whistleblower requested reconsideration and provided information about how his information was utilized, including in the parallel investigations.  CFTC

August 17, 2021

Investment advisor Murchinson Ltd., together with associated individuals Marc Bistricer and Paul Zogala, will pay restitution, interest, and penalties totaling nearly $9 million to resolve allegations that they caused a hedge fund client to violate Regulation SHO regarding uncovered short sales and other problematic trading practices.  Respondents allegedly provided erroneous order-marking information, thereby causing the hedge fund brokers to mismark the hedge funds’ sales as “long,” and resulting in their failure to borrow or locate shares prior to executing the sales.  SEC