CFTC settles with two foreign companies

Michael P. Tremoglie Aug. 28, 2012, 12:25pm

WASHINGTON (Legal Newsline) - The U.S. Commodity Futures Trading Commission announced Monday the issuance of an order filing and settling charges against Russia's SMP Bank and Epaster Investments an investment company located in Nicosia, Cyprus.

The two were alleged to have engaged in wash sales. This allegedly caused the execution of non-competitive pre-arranged trades in Japanese Yen options contracts traded on the Chicago Mercantile Exchange.

SMP and Epaster will pay civil penalties of $700,000 and $280,000 respectively. They also will be required to cease and desist from violating the federal regulations governing wash sales and non-competitive pre-arranged trading, as charged.

A CFTC inquiry found that on three occasions, SMP traded with itself in the March Japanese Yen options contract listed on the CME according to the announcement. SMP and Epaster were on opposite sides of two additional trades in same contract.

The CFTC alleges that SMP intentionally negated price competition in each of these trades, and the same SMP employees controlled both companies' trading accounts.

Each of the questioned orders was equal and offsetting in size and price, and was initiated at or near the same time, the CFTC says. As a result, the SMP employees knew when placing the relevant orders that another SMP or Epaster account would be the counterparty to the ensuing transaction, the CFTC said.

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