LAS VEGAS, NV – Fan Zhang, a resident of Las Vegas, Nevada and Cambridge, Massachusetts, has been charged with futures manipulation by the U.S. Commodity Futures Trading Commission (CFTC), officials announced on September 29, 2014. The CFTC alleges that Zhang engaged in fictitious sales and prearranged, noncompetitive trades involving Las Vegas Housing Market, Cash-Settled Cheese, and Ethanol futures contracts between December 26, 2012, and March 2013.
According to the CFTC’s order, Zhang transferred trading profits between two accounts – one held by his investment club, FZIC, LLC (of which he owns 50%), and another held in the name of his mother – by intentionally placing matching buy and sell orders. These trades were designed to discreetly move funds into his mother’s account without her knowledge. The order states his mother’s account realized over $200,000 in profits due to these prearranged trades.
The CFTC contends that Zhang’s actions negated legitimate market risk and price competition, constituting fictitious sales in violation of the Commodity Exchange Act (CEA). Furthermore, the agency alleges he violated CFTC Regulation 1.38(a) through these noncompetitive transactions.
As a result of the settlement, Zhang will pay a $250,000 civil monetary penalty. The order also prohibits Zhang from trading commodity futures and options for a period of five years. He is also required to cease and desist from any further violations of the CEA and related CFTC regulations.
The CFTC acknowledged the assistance of the CME Group in this case. Staff members Saadeh Al-Jurf, John Einstman, and Paul G. Hayeck were responsible for the investigation.
Source: CFTC.gov
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