Chicago, IL – March 28, 2023 – Dichao Xie, a Chinese national, has been charged with fraud by the Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Northern District of Illinois. The complaint alleges Xie misappropriated confidential information from his employer, a large multinational corporation, to illegally profit from trades in feeder cattle futures and options.
According to the CFTC, from approximately December 2021 to April 2022, Xie, who worked as a quantitative trader, misused his access to his employer’s trading positions and orders. He allegedly executed trades through his personal account as a counterparty to his employer’s trades, generating an estimated profit of $178,075. The complaint further states that Xie engaged in at least 71 such transactions.
The CFTC alleges Xie’s actions constituted both a breach of duty to his employer and illegal fictitious and noncompetitive trades, violating the Commodity Exchange Act (CEA) and related CFTC regulations. Specifically, Xie reportedly entered transactions on his own behalf within seconds of his employer’s transactions, creating an unfair advantage.
The CFTC is seeking civil monetary penalties, disgorgement of ill-gotten gains, restitution, a permanent ban from trading and registration, and a permanent injunction against further violations of the CEA and CFTC regulations.
“When market participants steal non-public information to trade for their personal benefit, they defraud the sources of the information and gain an unfair advantage,” said Ian P. McGinley, Director of Enforcement at the CFTC. “The CFTC is committed to maintaining the integrity of our commodities markets, and we will continue to focus on rooting out the unlawful misappropriation and misuse of confidential information.”
The case is being pursued by Ben Sedrish, Matthew Edelstein, Allison V. Passman, William Janulis, Scott Williamson, and Robert T. Howell of the CFTC’s Division of Enforcement, with assistance from the Insider Trading Task Force.
Individuals with information about potential commodity trading violations are encouraged to contact the CFTC via its toll-free hotline at 866-FON-CFTC (866-366-2382) or submit a tip online. Whistleblowers may be eligible for a percentage of collected monetary sanctions.
Source: CFTC.gov
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