PLANO, TX – R. Scott Hopkins, of Plano, Texas, and Thomas Carroll of Mahwah, New Jersey, have been penalized by the U.S. Commodity Futures Trading Commission (CFTC) for a fraudulent trade allocation scheme, the agency announced December 21, 2010. The scheme spanned from January 2006 to May 2009 and involved manipulating natural gas futures contracts.
The CFTC order requires Hopkins to pay a $650,000 civil monetary penalty and Carroll to pay $50,000. Both Hopkins and Carroll are permanently banned from trading and registering with the CFTC.
According to the CFTC, Carroll and Hopkins engaged in a scheme where they placed orders for natural gas futures contracts, directing the fills to Hopkins’ personal account. When trades proved unprofitable, they transferred the losses to Hopkins’ employer’s account, offsetting them and shielding Hopkins from financial harm. Conversely, winning trades remained in Hopkins’ personal account, creating a risk-free trading strategy.
Hopkins attempted to cover his tracks by altering trading account statements, removing his name and substituting his employer’s, the CFTC found. This effort was made to conceal his involvement in the fraudulent activity.
This CFTC action was the result of a joint investigation with the New York County District Attorney’s Office (NYCDAO) focusing on abusive trading practices on the NYMEX exchange. In related state court proceedings, Hopkins pled guilty to Forgery in the Second Degree, a felony, and faces a recommended sentence of probation, a $650,000 forfeiture, a $5,000 criminal fine, restitution, and 250 hours of community service. Carroll pled guilty to Criminal Facilitation in the Fourth Degree, a misdemeanor, and received a conditional discharge.
The CFTC acknowledged the assistance provided by the NYCDAO and the CME Group in this investigation.
Source: CFTC.gov
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