CFTC Obtains Another Guilty Plea of Market Manipulation, Makes Criminal Referral
Levi McAllister, Patrick R. Pennella, 31 March 2021
The Commodity Futures Trading Commission (CFTC) announced last week that it has obtained another admission from a trader of violations of the Commodity Exchange Act and CFTC regulations, demonstrating its continued aggressive enforcement of its market anti-manipulation provisions.
Emilio José Heredia Collado (Heredia) of Lafayette, California, admitted to engaging in the manipulation of a US price-assessment benchmark relating to physical fuel oil products for more than four years while employed as a fuel oil trader for a trading company. The CFTC imposed a permanent ban from trading commodity interests or engaging in other related activities and a $100,000 civil monetary penalty and made a criminal referral to the US Department of Justice.
Section 6(c)(1) of the Commodity Exchange Act (7 USC § 9(1)), as amended by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, includes an anti-manipulation provision. The CFTC promulgated a companion regulation at 17 CFR § 180.2 (Rule 180.2). These anti-manipulation provisions make it unlawful for any person to use or employ, or attempt to use or employ, any manipulative or deceptive device or contrivance in connection with any swap, contract of sale of any commodity in interstate commerce, or future delivery on or subject to the rules of any registered entity. Covered actions include fraudulent schemes or making untrue or misleading statements of material fact.
As we discussed in December 2020 and February 2021, the CFTC has aggressively pursued market manipulation schemes and has committed to making criminal and civil referrals to partner federal and state enforcement agencies in parallel with its civil enforcement efforts.
