CFTC Fines Firm for Reporting Commodity Positions in Multiple Grains Inaccurately (with Pantano Comment)

The CFTC issued an Order in which it filed and simultaneously settled charges against Marubeni America Corporation ("Marubeni"). Marubeni, a dealer and merchant of agricultural commodities, was charged with failing to submit accurate monthly CFTC Form 204 reports regarding the composition of its fixed-price cash grain purchases and sales in violation of the reporting requirements in CFTC Rule 19.01.

The CFTC stated that Marubeni held reportable positions in certain Form 204 agricultural commodities and was required to file reports showing the quantities of the fixed-price purchase and sale of open cash positions of the held commodities it hedged. According to the Order, Marubeni violated the reporting requirements pursuant to CFTC Rule 19.01 by filing 38 Form 204 reports that did not state accurately the quantities of Marubeni's fixed-price cash positions. The CFTC fined Marubeni $800,000.

The CFTC noted that its Division of Market Oversight had issued an advisory previously regarding the obligation of market participants to submit accurate Form 204 reports (see CFTC Staff Advisory No. 13-42 "Obligation of Reportable Market Participants to File CFTC Form 204 Reports", linked to CFTC Press Release 6639-13 dated July 8, 2013).

Pantano Comment: Even though this settlement order focuses on reporting cash grain positions, everyone should take note of it for reasons that might have nothing to do with the types of commodities that they trade or reports that they submit: • it reflects the increasingly hard line that the CFTC is taking on reporting violations;• the proposed position limits rule includes five types of reporting requirements, many of which are unclear and complex;• many traders have to submit CFTC Forms 40 and 40S in response to special calls by the CFTC; and• the obligations of FCMs, clearing members, foreign brokers and swap dealers under the OCR rule to submit information about their customers and counterparties in Forms 102A/B/S are detailed and complicated. In short, reporting is an area (i) where the CFTC has intensified its focus and (ii) of increased regulatory exposure for registrants and market participants.

See: CFTC Order.