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  • Glencore Pleads Guilty And Agrees To $1.1 Billion Penalty To Resolve Manipulation And Foreign Corruption Allegations
     
    06/02/2022

    On May 24, 2022, Glencore International A.G. of Switzerland (“Glencore”), an energy and commodities trading firm, and its affiliates Glencore Ltd. of New York and Chemoil Corporation of New York resolved long-running investigations by the Department of Justice (“DOJ”), the Commodity Futures Trading Commission (“CFTC”), and regulators in the UK and Brazil related to alleged foreign bribery and market manipulation schemes.  The companies agreed to pay total fines and monetary penalties in excess of $1.1 billion, including the largest penalty and disgorgement ever ordered by the CFTC, for conduct that spanned over ten years.  As part of its resolutions with the CFTC and the DOJ, Glencore and Glencore Ltd. have agreed to retain independent compliance monitors for three years and continue to cooperate fully and expeditiously with both enforcement agencies.  In addition to the corporate resolutions, two Glencore former employees have previously been charged.  A Glencore Ltd. senior fuel oil trader, Emilio Jose Heredia Collado, pleaded guilty in March 2021 to one count of conspiracy to engage in commodities price manipulation.  His sentencing is scheduled for June 17, 2022.  Similarly, in July 2021, a senior trader in charge of Glencore’s West Africa crude oil desk pleaded guilty to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering.
  • SEC And CFTC Bring $200 Million Settled Action Against Financial Institution For Alleged Violations Of Record-Keeping Requirements Due To Employee Off-Platform Communications Including WhatsApp And Text Messages
     
    12/21/2021

    On December 17, 2021, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) announced that each had entered into an agreement with J.P. Morgan Securities (the “Company”) to resolve issues related to the Company’s books-and-records obligations.  The agencies alleged that, over a period of several years, the Company failed to maintain and preserve copies of certain communications pursuant to recordkeeping rules for broker-dealer firms, swap dealers and future commission merchants – including WhatsApp and text messages on employee personal devices.  The Company admitted that its conduct was not in compliance with Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-4(b)(4) and 171-4(j) thereunder as well as Section 4(s)(h)(1)(B) of the Commodity Exchange Act and Regulations 166.3 and 23.602, and agreed to pay a total of $200 million to resolve the allegations ($125 million to the SEC and $75 million to the CFTC).
    CATEGORIES : CFTCSEC
  • CFTC Awards Record $200 Million To Whistleblower
     
    10/26/2021

    On October 21, 2021, the Commodity Futures Trading Commission (“CFTC”) announced it would be awarding a whistleblower its largest, publicly-announced single award under the Dodd-Frank whistleblower rewards program—nearly $200 million.  The whistleblower—who sources say worked for a major financial institution—provided extensive information and documents in 2012 that prompted the CFTC, another US regulator, and a foreign regulator to bring sizable enforcement actions related to benchmark manipulation.  The CFTC’s order stated that the whistleblower’s information provided “direct evidence of wrongdoing” and led to a successful enforcement action, and also assisted two other regulatory actions.  The record payment, according to the CFTC, reflects recognition of “a ‘meaningful nexus’ between the information provided and the CFTC’s ability to successfully complete its investigation.”
    CATEGORIES : CFTCWhistleblower
  • New York AG Demands Crypto Platforms Cease Operations
     
    10/26/2021

    On October 18, 2021, New York’s Attorney General (NYAG) issued cease-and-desist letters to two cryptocurrency platforms, demanding that they discontinue all operations in New York within ten days for alleged violations of the Martin Act.  The NYAG’s office also sent requests for information to three other cryptocurrency firms focused on “tethers,” a type of “stablecoin” cryptocurrency that is tied to the US dollar.
    CATEGORIES : CFTCCryptocurrencyNew York
  • CFTC Fines Crypto Exchange That Offered Margin Trading For Failing To Register As FCM, Prompting Calls For Further Rulemaking From One Commissioner
     
    10/06/2021

    On September 28, 2021, the Commodity Futures Trading Commission (CFTC) entered an order that imposed a $1.25 million fine on Payward Ventures Inc., which does business as digital asset exchange Kraken, for allegedly failing to register as a futures commission merchant (FCM) and for offering certain margin trading services in violation of Sections 4(a) and 4d of the Commodity Exchange Act (CEA).  Although the decision did not purport to break new legal ground, one CFTC Commissioner, Dawn Stump, noted that the decision “is informed by” the CFTC’s Final Interpretive Guidance on retail commodity transactions involving certain digital assets issued in 2020, and issued a concurring statement calling upon the CFTC to issue rulemaking to clarify and codify that guidance, which is increasingly important in the cryptocurrency space.