CFTC Cracks Down On Money Managers; Amaranth Not Alone In Attempted Market Manipulation

Oct 3 2007 | 1:42pm ET

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.


In Depth

Part II: Roubini Talks Risk, Recovery And The Threat Of A Triple Dip Recession

Oct 21 2014 | 12:41pm ET

In the second half of our interview with Nouriel Roubini, FINalternatives editor...

Lifestyle

Balyasny Pays Over $6M For Lakefront House

Oct 22 2014 | 10:29am ET

A venture headed by hedge fund manager Dmitry Balyasny just paid $6.2 million for...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

Demeter: Family affair

David and James Hamman launched their fundamental Livestock and Grains Program in March of 2010 but it really was decades in the making.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.