As a coda to last year’s enforcement action against Moore Capital Management, the CFTC has filed and settled charges against Christopher Louis Pia for attempted price manipulation. The hedge fund portfolio manager and CFTC registered Associated Person (“AP”) attempted to manipulate the settlement price of palladium and platinum futures on the New York Mercantile Exchange (“NYMEX”) while employed by Moore Capital Management.
The CFTC order finds that from November 2007 through May 2008, Pia used a trading strategy known as “banging the close” to manipulate palladium and platinum futures contracts. When “banging the close,” Pia would enter market-on-close orders in the last ten seconds of trade in an attempt to push up prices in the final moments of the day. Such a strategy is possible because the palladium and platinum markets are thinly traded, illiquid, and use volume-weighted average for settlement price calculations.
The order imposes considerable restrictions on any trading Pia plans to carry out in the commodity futures market. In addition to a $1 million dollar penalty for price manipulation, the AP is permanently banned from trading during the market closing period, and from trading CFTC-regulated platinum and palladium products. He also must disclose a copy of the court order to current investors, and to all current and future employees, principles, and officers, and provide a disclaimer document explaining the order to existing and future clients. Furthermore, a monitor (employed at this own expense) will ensure that Pia complies with this order for a five-year period and imposes considerable record-keeping and new registration obligations.
Previously the CFTC settled similar charges against Moore Capital Management, LP (MCM), Moore Capital Advisors, LLC (MCA) and Moore Advisors, Ltd. (MA). The defendants were required to pay a $25 million civil monetary penalty and placed restrictions on their CFTC registrations, including a two-year restriction on trading during the closing periods of the palladium and platinum futures and options markets.