HOUSTON, TX – June 15, 2021 – Mathew D. Webb, owner of Classic Energy LLC, has been charged with fraud by the Commodity Futures Trading Commission (CFTC) for a scheme to misappropriate confidential trade information and facilitate fictitious trades, according to an order filed today.
Webb, of Houston, Texas, and his company, Classic Energy LLC, are accused of misappropriating block trade order information from their brokerage customers between September 4, 2015, and January 22, 2019. The CFTC alleges Webb collaborated with traders employed by Classic’s customers to disclose this confidential information to another trader, who then executed fictitious trades to profit from offsetting positions. These profits were then shared with Webb and the involved traders.
The CFTC also found that Webb and Classic defrauded a customer by paying kickbacks to certain traders in exchange for directing more block trade business to Classic Energy LLC. This practice, occurring between September 2015 and August 2019, inflated Classic’s commission revenue and Webb’s profits.
This is the second enforcement action against Webb and Classic Energy LLC by the CFTC. A previous order, issued September 30, 2019, charged them with similar violations between April 2014 and September 2015. Today’s findings extend the period of misconduct an additional four years.
As part of the settlement, Webb and Classic Energy LLC must disgorge $585,000 in ill-gotten gains. They are also permanently banned from trading commodity interests and are prohibited from applying for CFTC registration or engaging in any activity requiring it. The CFTC has reserved the right to determine additional monetary sanctions based on the respondents’ cooperation agreement.
“This enforcement action demonstrates the CFTC’s commitment to pursuing those who misappropriate information and facilitate fictitious trading for their personal profit,” said Acting Director of Enforcement Vincent McGonagle. “Further, the CFTC will not tolerate registrants that engage in and allow such misconduct to occur and continue unabated within their firms.”
Source: CFTC.gov
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