Commodities Firm Settles CFTC Charges for Trading on MNPI

A Connecticut-based commodities firm settled CFTC charges for trading on misappropriated material non-public information.

In the Order, the CFTC found that the firm engaged in a fraudulent scheme to misappropriate sensitive non-public market information (including the shipping, negotiation plans and bids related to competitors' fuel oil cargoes), and trading on the basis of this information, "to the detriment of its counterparties and the integrity of those markets." The CFTC found that members of the firm's trading group knew they were trading on the non-public information. The CFTC said that the related transactions "yielded approximately $30 million in profits."

The CFTC found that the firm violated Section 6(c)(1)("Prohibition regarding manipulation and false information") of the Commodity Exchange Act and Regulation 180.1 ("Prohibition on the employment, or attempted employment, of manipulative and deceptive devices"), which prohibit engaging in deceptive or manipulative practices in connection with the sale of commodities. The firm neither admits nor denies the findings, except as noted in related actions.

To settle the charges, the firm agreed to (i) pay a civil monetary penalty of $61 million, which may be offset by amounts paid pursuant to the DOJ, (ii) pay disgorgement of $30,551,150, (iii) implement remedial measures and (iv) undertake steps to enhance anti-bribery and anti-corruption compliance programs.