Summit, New Jersey – The U.S. Commodity Futures Trading Commission (CFTC) settled charges against Olam Americas, Inc. and its parent company, Olam International, Ltd., for violations of the Commodity Exchange Act (CEA) and CFTC Regulations. The settlement, finalized January 20, 2015, requires the companies to pay a $3 million civil monetary penalty.
The CFTC order details that between February 2011 and January 2013, the cocoa futures trading desks of Olam International, based in London, and Olam Americas, located in Summit, New Jersey, were not operating independently. Traders on both desks shared position information, collaborated on trades, and in some instances, a trader from Olam Americas directly supervised trading activities for Olam International. This lack of independent control led to violations of position limits established by the CFTC.
Specifically, the CFTC found that the combined cocoa futures positions of the two entities exceeded the 1,000-contract limit on six trading days between February 2011 and January 2013. Additionally, Olam International and Olam Americas engaged in 64 improper Exchange of Futures for Physical (EFP) transactions between their own accounts – transactions that are only permitted between independently controlled entities.
The companies also filed inaccurate “Statement of Reporting Trader” (Form 40) documents with the CFTC in 2010 and 2012, failing to disclose the lack of independent control between their cocoa futures trading accounts. While a revised form was submitted in February 2013 acknowledging the integrated trading unit, the companies continued to exceed position limits on one additional day in August 2014.
As part of the settlement, Olam International and Olam Americas are prohibited from committing future violations of the CEA and CFTC Regulations. Stephanie Reinhart, David Chu, and Judith McCorkle of the CFTC’s Division of Enforcement led the investigation.
Source: CFTC.gov
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