HOUSTON, TX – Mathew D. Webb, owner of Classic Energy LLC, has been charged with order abuse fraud by the U.S. Commodity Futures Trading Commission (CFTC), according to an order filed on September 30, 2019. The CFTC alleges Webb misused confidential, non-public information related to block trades in natural gas futures on ICE Futures US between April 2014 and September 2015.
The investigation revealed that Webb, instead of facilitating block trades for Classic Energy’s customers as expected, used the information to trade against them in his personal account. He allegedly deceived customers by continuing to charge brokerage commissions as if acting solely as a broker, while simultaneously functioning as a trading counterparty.
Through this scheme, Webb is said to have profited over $400,000. The CFTC found Classic Energy vicariously liable for Webb’s actions. The order imposes a $1.5 million civil monetary penalty on both Classic Energy and Webb. Webb is also required to disgorge $413,065 in ill-gotten gains.
In addition to the financial penalties, Webb is banned from trading on or through any CFTC-registered entity and from engaging in activities requiring CFTC registration until January 3, 2022. The CFTC also cited Classic Energy and Webb for multiple failures in supervision and recordkeeping procedures.
“This enforcement action shows that the Commission will continue to vigorously pursue those who misappropriate confidential information, for personal benefit, in violation of a preexisting duty,” stated James McDonald, CFTC Enforcement Director. “This form of misconduct undermines trust and confidence in vital futures markets and it will not be tolerated.”
The case was led by CFTC staff members Alison Auxter, Lauren Fulks, Thomas Simek, Christopher Reed, and Charles Marvine. The CFTC encourages customers to report suspicious activity via its toll-free hotline at 866-FON-CFTC or through its online tip/complaint portal.
Source: CFTC.gov
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