New York, NY – January 22, 2008 – The U.S. Commodity Futures Trading Commission (CFTC) announced a settled case against Naresh Kumar Jain stemming from unlawful trading activity in commodity futures contracts. The charges center around a pattern of “wash sales” and other prohibited practices designed to generate artificial profits.
According to a consent order entered by U.S. District Judge Richard J. Holwell in the Southern District of New York, Jain, along with Supama International DMCC, Aaristo Commodities and Futures DMCC, Kanta Nath Jain, and Hainke & Anderson Trading LLC, engaged in manipulative trading on the New York Mercantile Exchange and the Chicago Mercantile Exchange Globex platform in March and April of 2007. The CFTC initially filed a complaint on April 5, 2007, outlining the alleged scheme.
The core of the fraud involved Supama purchasing commodity futures contracts at artificially low prices from a co-defendant, then immediately reselling them back at inflated prices. This created a profit for Supama and a corresponding loss for the other party, all without any actual change in the open positions held by either entity. The illegal transactions involved contracts for copper, gold, crude oil, and natural gas.
The CFTC found that on at least three trading days in March 2007, this scheme resulted in $164,680 in illicit profits for Supama’s accounts, matched by equivalent losses for the other defendant. These transactions were characterized by fast-matched, off-market prices in illiquid, back-month contracts, executed during unusual trading hours.
As a result of the settlement, Supama International DMCC is required to pay a $164,680 civil monetary penalty. The company must also implement enhanced compliance procedures to prevent future violations of the Commodity Exchange Act. The CFTC acknowledged the assistance of the New York Mercantile Exchange, MF Global Inc., and the Dubai Financial Services Authority in the investigation.
Source: CFTC.gov
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