CFTC Orders Commodities Trading Company to Pay Penalty for Executing Wash Trades

The CFTC issued an order and simultaneously settled charges against a commodities trading company for executing wash trades involving agricultural contracts on the Chicago Board of Trade ("CBOT") and on the Kansas City Board of Trade ("KCBT").

The Order states that on multiple occasions the commodities trading company engaged in wash sales and unlawful noncompetitive transactions in certain agricultural futures product. Before orders for these trades were entered on an exchange, the commodities trading company entered equal and opposite transactions in the same futures contract for another account that was also owned by Cargill de México, and matched the product, quantity, price, and timing of those orders and trades. The Order states that by so prearranging, structuring and entering these orders, which negated the risk incidental to an open and competitive marketplace, the company also engaged in noncompetitive transactions.

The Order imposes a $500,000 civil monetary penalty and requires the company to cease and desist from further violations of CEA Section 4c(a)(1) ("Prohibited Transactions") and CFTC Rule 1.38(a) ("Execution of Transactions").