The US Commodity Futures Trading Commission has issued an order filing and simultaneous settling charges against Noble Americas for entering into commodity futures trades and exchange for physical trades in heating oil and gasoline on the New York Mercantile Exchange and Globex that were wash and fictitious sales on several occasions during the period 30 March 2007 through 30 July 2007.
These wash and fictitious sales trades were for the same contract, quantity and same or similar price, with Noble Americas on both sides of each trade.
The CFTC order imposes a USD130,000 civil monetary penalty on Noble Americas, a subsidiary of the Hong Kong-based Noble Group.
The order also requires Noble Americas to institute internal controls, policies and procedures necessary to ensure that transactions by Noble Americas on US commodity futures and options markets comply with federal commodity laws, rules and regulations governing such markets.
Additionally, Noble Americas was ordered to cease and desist from violating the Commodity Exchange Act.
According to the order, in certain instances Noble Americas prearranged the execution of these trades on Nymex through a Futures Commission Merchant. In other instances, Noble Americas used EFP transactions to transfer positions from one Noble Americas trader to another.
Noble Americas also effectuated wash sales trade directly by entering virtually simultaneous buy and sell orders on Globex with Noble Americas on both sides of the trades.
The order finds that because Noble Americas intended to negate market risk and price competition, and thereby avoid a bona fide market transaction and produce a virtual financial nullity, the trades constituted wash sales, fictitious sales and non-competitive transactions and caused non-bona fide prices to be reported in violation of the Commodity Exchange Act and CFTC regulations.
