Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich May 3, 2010

The CFTC issued an order filing and simultaneously settling charges against Noble Americas Corp., , a subsidiary of the Hong Kong-based Noble Group, Ltd, for entering into commodity futures trades and exchange for physical (EFP) trades in heating oil and gasoline on the New York Mercantile Exchange and Globex that were wash and fictitious sales on several occasions during the period of March 30, 2007, through July 30, 2007.

These wash and fictitious sales trades were for the same contract, quantity and same or similar price, with Noble Americas on both sides of each trade. The CFTC order imposes a $130,000 civil monetary penalty on Noble Americas. The order also requires Noble Americas to institute internal controls, policies and procedures necessary to ensure that transactions by Noble Americas on U.S. commodity futures and options markets comply with federal commodity laws, rules and regulations governing such markets.

According to the order, in certain instances, Noble Americas prearranged the execution of these trades on NYMEX through a Futures Commission Merchant (FCM). In other instances, Noble Americas used EFP transactions to transfer positions from one Noble Americas trader to another. Noble described the trades to the FCM as “Noble-Noble EFP”.

Noble Americas also effectuated wash sales trade directly by entering virtually simultaneous buy and sell orders on Globex with Noble Americas on both sides of the trades.

The order finds that because Noble Americas intended to negate market risk and price competition, and thereby avoid a bona fide market transaction and produce a virtual financial nullity, the trades constituted wash sales, fictitious sales and non-competitive transactions and caused non-bona fide prices to be reported in violation of the Commodity Exchange Act and CFTC regulations.

Comments are closed.