Credit Suisse is to pay penalties totalling USD650,000 to settle charges that London-based Credit Suisse International exceeded the CFTC all-months speculative position limit for the Chicago Board of Trade (CBOT) wheat futures contracts in April and June 2009, despite having been granted an increased hedge exemption by the CFTC.
The penalty includes a USD140,000 charge against Credit Suisse Securities (USA) LLC (CSS-USA), based in New York, NY, for submitting materially false or misleading information during the CFTC’s investigation into certain inflated swap positions and thus inflated hedge exemptions for CBOT wheat futures contracts for CSS-USA, CSI, and other affiliates for several days in April and June 2009.
The Order finds that despite having received an increased hedge exemption that increased its all-months position limit in CBOT wheat futures contracts, CSI nevertheless exceeded its increased all-months position limit on several days in April and June 2009. For example, on 1 April, 2009, CSI had an all-months CBOT wheat future net long position of 9,831 contracts, which exceeded its increased position limit by 2,023 contracts.
The Order further finds that in March 2013, CSS-USA submitted to Enforcement, through counsel, documents purporting to reflect, among other information, Credit Suisse’s futures position related to its credit migratory exemption for the relevant days in April and June 2009. While the March 2013 submission purportedly reflected that Credit Suisse had larger credit migratory swap positions and thus larger hedge exemptions in April and June 2009 than had been previously reported to the CFTC, the submission in fact reflected inflated credit migratory swap positions and thus inflated hedge exemptions, making them materially false or misleading.
