CFTC Orders Trader to Pay Penalty for Engaging in Unlawful Noncompetitive Futures Trades

The CFTC issued an order filing and settling charges that a former employee of of an FCM arranged the unlawful execution of noncompetitive (off-exchange) futures trades over an 18-month period, which constituted "fictitious sales" and resulted in the reporting of non-bona fide prices (because they were neither executed on an exchange nor associated with a related cash or derivatives position). The order requires the former employee to pay a monetary penalty and suspends his registration as an Associated Person for a four-month period and also prohibits Hutchen from violating Section 4c(a) of the CEA and CFTC Regulation 1.38(a), as charged.

According to the order, the motive behind the improper trades was not venal, but rather was "to limit his clients' market risk, and to minimize the 'slippage' or price difference between the long and short positions purchased on their behalf."

View Order in full here (links externally to CFTC website).See also: Press Release; Related news item - CFTC Orders Firm to Pay $5 Million Civil Monetary Penalty for Unlawful Noncompetitive Trades.