Firm Settles CFTC Charges for Wash Sale Violations

A Taiwanese financial services firm settled CFTC charges for engaging in wash sales and executing noncompetitive trades.

According to the Order, from October 2022 to December 2022, the firm maintained separate trading accounts at two different Taiwanese brokers and entered "offsetting orders for the purchase and sale of the same delivery month of the same futures contract at the same price" in order to transfer some or all of its open futures positions between its trading accounts at the two brokers. During the relevant period, the firm executed 50 wash trades between the two trading accounts, totaling approximately 175 contracts involving six different products, with an aggregate value of about $17 million. These trades were structured so that buy and sell orders would be filled at the same price, negating market risk and minimizing market competition.

The CFTC found that the firm violated CEA Sections 4c(a)(1) ("Prohibited transactions") and (2)(A) ("Jurisdiction of Commission") and CFTC Rule 1.38(a) ("Execution of transactions").

To settle the charges, the firm agreed to (i) cease and desist from further violations of CEA Sections 4c(a)(1) and (2)(A) and CFTC Rule 1.38(a); and (ii) pay a civil monetary penalty of $200,000.