The U.S. Commodity Futures Trading Commission’s Division of Enforcement has been busy this year cracking down on white collar criminals, with hedge funds and commodity trading advisors finding themselves in the hot seat more than a few times.
The agency awarded a record total of more than $540 million in civil monetary penalties, restitution, and disgorgement from defendants in actions involving fraud, manipulation, and other misconduct in fiscal year 2007, which ended on Sept. 30.
Of the 41 new actions that were filed during this time, the Commission filed eight actions against hedge funds, commodity pool operators and trading advisors, and three attempted manipulation cases in the energy markets involving Amaranth Advisors, Energy Transfer Partners and Marathon Petroleum Company.
The 2007 results cap a five-year period where the CFTC’s Enforcement Division litigated more than 50% of its cases and was awarded in excess of $1.8 billion in civil monetary penalties, restitution and disgorgement.
Meanwhile, it looks like Amaranth and its famed trader Brian Hunter weren’t alone in attempting to take the energy markets for a ride. The last five years produced an all-time high number of cases involving market manipulation and false reporting in the energy markets.
Since December 2002, the CFTC has charged a historical all-time high of 38 companies and 25 individuals in the energy sector for manipulation, attempted manipulation, false reporting and wash trading violations under the Commodity Exchange Act. The CFTC has thus far been awarded $308 million in civil monetary penalties from a number of the companies and individuals charged in those energy prosecutions.
During the same period of time, the CFTC has worked with the Department of Justice to assist in the criminal prosecution of 42 traders and energy companies.
“The CFTC’s impressive enforcement record compliments our effective principles-based approach to market oversight by sending the strong message that market malfeasance will not be tolerated,” said CFTC Acting Chairman Walt Lukken.
The Division of Enforcement plans to continue its enforcement crackdown in the energy markets, with dozens of traders, hedge funds, and brokerage firms currently under investigation for potential manipulation of various energy products.