The US Commodity Futures Trading Commission has issued an order filing and simultaneously settling charges that Moore Capital Management and its affiliates attempted to manipulate the settlement prices of platinum and palladium futures contracts on the New York Mercantile Exchange.
The CFTC also filed and settled charges that Moore Capital failed to diligently supervise the handling of its commodity interest business.
The CFTC order requires Moore Capital Management and Moore Capital Advisors, both based in New York, and Moore Advisors, a Bahamian entity, jointly and severally to pay a USD25m civil monetary penalty and restricts their registrations as commodity pool operators and/or commodity trading advisers for three years.
The order also requires these entities to comply with undertakings, including a two-year restriction on their trading within 15 minutes of and during the closing period of the platinum and palladium futures and options markets.
The CFTC order finds that since at least November 2007 through May 2008, a former Moore Capital portfolio manager attempted to manipulate the settlement prices of platinum and palladium futures contracts traded on the Nymex by engaging in a practice known as “banging the close.” Specifically, the former portfolio manager’s orders were entered in a manner designed to exert upward pressure on the settlement prices of the platinum and palladium futures contracts.
The CFTC order finds that Moore Capital failed to supervise diligently the former portfolio manager’s trading and failed to have sufficient policies and procedures designed to detect and deter the violations found in the order.
Moore Capital says that neither its principals nor its current management were involved in any improper trading, and none have been accused of any wrongdoing.
“Moore Capital has cooperated fully with the CFTC throughout its investigation. We are committed to high standards of integrity in our business practices and have worked diligently to reach a settlement with the CFTC,” the firm says.
In addition to the civil monetary penalty and the restricted registration and trading restrictions, the CFTC order requires Moore Capital to (1) implement a policy requiring certain non-equity trade-related communications to be recorded, maintained and reviewed; (2) submit a report to the CFTC on their compliance with the undertakings; and (3) distribute the CFTC order to current and future employees, principals and officers.
