Washington, D.C. – Absa Bank, Ltd., a financial services company headquartered in Johannesburg, South Africa, has been penalized by the U.S. Commodity Futures Trading Commission (CFTC) for manipulative trading practices involving corn and soybean futures contracts. The CFTC issued an order on September 25, 2014, simultaneously filing charges and settling the case against the bank.
The order requires Absa to pay a $150,000 civil monetary penalty for executing prearranged, noncompetitive trades with FirstRand Bank, Ltd., also based in Johannesburg. The CFTC previously sanctioned FirstRand for its involvement in the same unlawful scheme. The settlement mandates that Absa strengthen its internal policies and procedures to prevent future violations of the Commodity Exchange Act (CEA) and CFTC Regulations.
According to the CFTC’s findings, between June 2009 and August 2011, Absa and FirstRand engaged in prearranged trading of CBOT corn and soybean futures. Employees from both banks coordinated these trades via telephone, agreeing on the contract details, quantity, price, direction, and timing before execution. These prearranged trades eliminated market risk and fair competition, effectively constituting fictitious sales, and violating the CEA.
The CFTC noted Absa’s cooperation during the investigation as a factor in the settlement. The agency also acknowledged the assistance provided by the CME Group. The order compels Absa to cease and desist from further violations of Section 4c(a)(1) of the CEA and CFTC Regulation 1.38(a).
The case was led by CFTC Division of Enforcement staff members Kara Mucha, Steven Kim, Kassra Goudarzi, Michael Solinsky, and Charles D. Marvine.
Dennis Holden of the CFTC Media Contact can be reached at 202-418-5088.
Source: CFTC.gov
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