Washington, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) settled charges against CIC Banque Credit Industriel D’Alsace Et De Lorraine Société Anonyme (Banque CIAL) for engaging in wash sales on June 30, 2004. The French-based bank utilized a Canadian broker to execute the illicit trades on the Chicago Board of Trade.
According to the CFTC, a trader at Banque CIAL placed simultaneous buy and sell orders for 2,940 September 2004 Five Year Treasury Note futures contracts. These orders were executed at the same price and approximately the same time through brokers on the trading floor. A second series of similar trades involving 2,363 September 2004 Two Year Treasury Note futures contracts were then executed using the same method.
The CFTC found that these transactions were not intended to generate profit or expose Banque CIAL to market risk. Instead, the bank’s stated purpose was to evaluate its internal risk management system. However, the agency determined that the trades constituted prohibited wash sales, designed to create the illusion of legitimate market activity while avoiding potential losses from market fluctuations.
As part of the settlement, Banque CIAL agreed to pay a civil monetary penalty of $80,000. Additionally, the bank committed to implementing new compliance procedures to ensure future transactions on U.S. markets adhere to all applicable laws, rules, and regulations. The case was led by CFTC Enforcement Division staff members Louis Traeger, Ralph DerAsadourian, William Janulis, Scott Williamson, Rosemary Hollinger and Richard Wagner.
The settlement was announced on September 28, 2007.
Source: CFTC.gov
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