WASHINGTON D.C. – Mehran Khorrami, a New York resident, has been charged with engaging in manipulative trading practices, specifically wash sales and non-competitive transactions, according to a settlement reached with the Commodity Futures Trading Commission (CFTC) on May 7, 2020. Khorrami, acting on behalf of his firm Cayley Investment Management, LLC (CIM), will pay a $150,000 civil penalty to resolve the charges.
The CFTC order details that Khorrami executed a series of pre-arranged trades on February 8, 2018, involving futures contracts for foreign currency, crude oil, and gold. These transactions were designed to create the illusion of legitimate trading activity while lacking economic substance. Specifically, Khorrami placed simultaneous buy and sell orders for six different CME futures contracts, initially at varying prices. When these orders failed to execute, he repeatedly adjusted the bid and offer prices until they matched, effectively creating pre-arranged cross-trades.
These non-competitive trades encompassed contracts for crude oil, British Pound, Euro FX, Swiss Franc, and Japanese Yen, totaling six such transactions. The CFTC alleges that these actions violated the Commodity Exchange Act and its associated regulations, constituting market manipulation.
In addition to the financial penalty, the order mandates that Khorrami and CIM cease and desist from any further violations of the Commodity Exchange Act and CFTC regulations. The CFTC conducted its investigation in coordination with a parallel inquiry by the CME Group.
The CME Group also took disciplinary action against Khorrami, issuing a Notice on May 7, 2020, requiring him to pay a $30,000 fine and serve a 10-day suspension related to the same manipulative trading activity. The CFTC acknowledged the CME’s assistance in the investigation.
Dmitriy Vilenskiy, Luke Marsh, Jason Gizzarelli, and Paul Hayeck of the CFTC’s Division of Enforcement led the investigation and secured the settlement.
Source: CFTC.gov
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