John Aaron Brooks of Houston, Texas, is facing charges of fraud following a civil complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) on September 27, 2013. The complaint alleges Brooks defrauded an affiliate of a large commercial bank while employed as a Director in its commodities business.
According to the CFTC, Brooks engaged in a scheme to conceal trading losses by inflating the value of New York Mercantile Exchange Chicago Ethanol (Platts) Futures contracts. This manipulation reportedly occurred for the majority of days over an eleven-month period, beginning in November 2010 and continuing through October 20, 2011.
The CFTC alleges Brooks knowingly entered false, inflated prices into an internal computer system used for trade booking and valuation. This allowed him to hide the losses he was incurring, which ultimately totaled over $40 million in realized losses for the bank and its affiliate before the fraud was discovered. Brooks was subsequently terminated from his position.
The case was filed in the U.S. District Court for the Southern District of New York. The CFTC is seeking a civil monetary penalty, restitution for the losses incurred, a ban from trading and registration activities, and a permanent injunction to prevent further violations of federal commodities laws. The investigation was led by Janine Gargiulo, Michael Geiser, Trevor Kokal, David Acevedo, Lenel Hickson, Stephen J. Obie, Manal Sultan, and Vincent McGonagle of the CFTC’s Division of Enforcement.
As of September 27, 2013, the litigation is ongoing, and Brooks has not yet issued a public statement regarding the charges.
Source: CFTC.gov
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