According to Dodd-Frank.com, the Commodity Futures Trading Commission (CFTC) will not hesitate to penalize anyone found lying in an investigation. The CFTC made this very clear during a recent investigation into pre-stamping with an introducing broker.
When a commodity futures or options order is being processed, the processor must stamp the order form in the correct time bracket, in order to ensure clarity as to when the order was made. However, often times, introducing brokers will stamp a number of these forms beforehand to hasten the process. This often leads to orders being placed with incorrect time stamps which may be used for fraudulent trading activity such as unauthorized trades or unlawful post-execution trade allocation.
In the investigation, the CFTC sat down with Susan Butterman to ask her some questions. Butterman, who would often pre-stamp several order forms, covering every time bracket as a way to be prepared, told the CFTC said that she only stamped forms as orders were being processed. While why she lied initially has not been made clear, the CFTC pressed her with evidence to the contrary, and she quickly caved, admitting to pre-stamping regularly.
While Butterman wasn’t a particularly difficult witness, it seems the CFTC is using her as a deterrent against lying in future investigations, as she will be penalized $50,000 for her actions.