Washington, D.C. – Commodity giant Copersucar Trading A.V.V., a subsidiary of the world’s largest sugar and ethanol company Copersucar S.A., has been slapped with a $300,000 penalty by the U.S. Commodity Futures Trading Commission (CFTC) for engaging in illegal wash trading practices. The CFTC issued an order on August 15, 2017, detailing the charges and settlement.
According to the order, between April 2013 and September 2014, Copersucar executed prearranged, noncompetitive “wash trades” involving Sugar No. 11 futures Trade at Settlement (TAS) contracts on ICE Futures U.S. These wash trades involved the company entering equal and opposite orders for its own accounts, effectively negating risk and circumventing open market competition.
The CFTC found that authorized agents of Copersucar intentionally matched orders in quantity, product, and price within seconds of each other across separate Copersucar-owned accounts. This practice constitutes a violation of Section 4c(a)(1) of the Commodity Exchange Act and CFTC Regulation 1.38(a). The agency asserts that these prearranged transactions were noncompetitive and undermined the integrity of the marketplace.
In addition to the monetary penalty, Copersucar is required to cease and desist from further violations of the cited regulations. The company has reportedly already implemented changes to its business operations to reduce the need for position transfers at month’s end. Copersucar also stated it has revised its policies, implemented self-trade prevention technology, and increased training for its agents to prevent future occurrences of wash trading.
The CFTC investigation was led by staff members Matthew Hunter, Walter Spilka, and Kelly Beck, with contributions from Elizabeth C. Brennan, Michael Cazakoff, K. Brent Tomer, Lenel Hickson Jr., and Manal M. Sultan of the Division of Enforcement.
Source: CFTC.gov
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