HOUSTON, TX – Marcus Schultz of Houston, Texas, has been charged with fraud by the Commodity Futures Trading Commission (CFTC) for misappropriating confidential information from his employer and executing fictitious trades, according to an order filed September 30, 2020.
The CFTC alleges that between April 2013 and February 2016, Schultz, while working as an energy trader, stole material, non-public block trade order information. He then used this information to conduct trades benefiting himself and others, rather than his employer.
Specifically, Schultz allegedly shared the confidential order information with a broker who arranged non-arm’s length block trades. These trades were executed at prices designed to profit the broker and other traders involved, with Schultz receiving a share of the profits. He then misrepresented these trades to appear as legitimate business activity for his employer.
The scheme extended beyond block trades. Schultz is accused of providing the broker with advance, non-public information related to the U.S. Energy and Natural Gas Storage Report, allowing the broker to profit from trading on this insider knowledge. Again, Schultz allegedly received a portion of those profits.
To conceal his activities, Schultz made false statements to both ICE Futures US and the CFTC during their investigations. He denied giving brokers permission to trade against his orders, despite evidence to the contrary.
As a result of the CFTC’s investigation, Schultz is required to pay a $669,750 civil monetary penalty and disgorge $427,067.45 in ill-gotten gains. He is also banned from trading on any CFTC-registered entity or engaging in any activity requiring CFTC registration for six years.
The Department of Justice Criminal Fraud Section and the U.S. Attorney for the Southern District of Texas have also filed criminal charges against Schultz on June 29, 2020. The CFTC order allows for offsets to payments made in the related criminal case. The CFTC acknowledged the assistance of ICE and the Department of Justice in the investigation.
Source: CFTC.gov
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