Washington, D.C. – Newedge USA, LLC, a New York-based futures commission merchant, has been penalized $700,000 by the U.S. Commodity Futures Trading Commission (CFTC) for submitting inaccurate large trader reports and violating a prior CFTC order. The penalty was announced on January 9, 2012.
The CFTC found that between March 2011 and July 2011, Newedge’s reports contained numerous errors, including incorrect commodity codes, misstated positions in accounts, and inaccurate open interest figures. The company also issued erroneous delivery notices and failed to report required positions, violating a February 7, 2011 order directing Newedge to improve its reporting accuracy and timeliness.
David Meister, CFTC Enforcement Director, emphasized the importance of accurate large trader reports, stating they are crucial for monitoring compliance with speculative limit rules and assessing market power and risk. He indicated that the CFTC expects strict adherence to reporting rules and will sanction those who fail to comply, particularly those who disregard prior orders.
In addition to the monetary penalty, the CFTC order requires Newedge to cease and desist from violating the Commodity Exchange Act’s reporting requirements and to implement procedures to prevent future violations. The company has already begun revising its reporting procedures and engaged a consulting firm to recommend further improvements.
Newedge USA, LLC is a subsidiary of Newedge Group, SA, a global financial services company. The company is one of approximately 200 firms that submit around 600,000 large trader position reports to the CFTC daily.
The case was led by CFTC staff members Susan Gradman, Joseph Patrick, Gary Martinaitis, Lisa Dooley, William Maldonado, William Gehrke, Scott Williamson, Rosemary Hollinger, and Richard Wagner.
Source: CFTC.gov
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