Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and simultaneously settling charges against Cantor Fitzgerald & Co. (Cantor) of New York, N.Y., for engaging in wash sales and causing the execution of noncompetitive transactions of Reformulated Gasoline Blendstock for Oxygen Blending (RB) gasoline futures contracts traded on the New York Mercantile Exchange (NYMEX). Cantor has been registered with the CFTC as a futures commission merchant since 1982.
The CFTC order, entered on February 22, 2011, requires that Cantor pay a $100,000 civil monetary penalty. The order also requires Cantor to cease and desist from further violations of the Commodity Exchange Act (CEA) and CFTC regulations and to comply with certain undertakings.
The CFTC order finds that, on one or more occasions from March through April 2007, a then-employee of Cantor simultaneously entered orders with certain floor brokers from two different floor brokerage operations to buy and sell RB gasoline futures contracts for the same quantity, price and contract month. In each instance, the employee prearranged to have these identical orders executed opposite each other, the order finds. As an example, the order finds that the employee placed a telephone call to a trader at a floor brokerage operation to sell RB gasoline futures contracts at a certain price on behalf of a Cantor customer. According to the order, the employee then telephoned a trader at a second floor brokerage operation to buy the same amount of RB gasoline futures contracts at the same price as the sell order and on behalf of the same customer. The employee then instructed the trader at the first floor brokerage operation to execute this order opposite the trader from the second floor brokerage operation. The order finds that the employee prearranged the purchase and sale of hundreds of RB gasoline futures contracts and that the prearranged transactions constituted prohibited wash sales and noncompetitive transactions.
The order further finds that Cantor is liable for the employee’s violations of the CEA and CFTC regulations because the employee was acting within the scope of his employment with Cantor.
In settling this matter, the CFTC has taken into account Cantor’s effective cooperation and the prompt corrective action Cantor undertook upon discovery of the unlawful activity.
The CFTC thanks the CME Group (NYMEX) for its assistance.
The following CFTC Enforcement Division staff members are responsible for this case: Joseph Rosenberg, Philip Rix, Steven Ringer, Lenel Hickson, Stephen J. Obie and Vincent McGonagle.