Washington, D.C. – United States Commodity Funds LLC (U.S. Commodity Funds) has been slapped with a $2.5 million penalty by the Commodity Futures Trading Commission (CFTC) for disclosure failures related to the United States Oil Fund, LP (USO), the agency announced November 8, 2021.
The CFTC alleges that U.S. Commodity Funds, a registered commodity pool operator, did not fully inform investors in the USO fund about position limits imposed by its futures commission merchant between April 22, 2020, and June 12, 2020. These limits would have prevented the fund from purchasing additional futures contracts needed for a new exchange-traded fund share offering.
According to the CFTC, this lack of full disclosure constituted a fraud against commodity pool participants. Acting Director of Enforcement Vincent McGonagle stated the agency is committed to pursuing those who fail to meet their disclosure obligations, emphasizing it as a “fundamental obligation” under the Commodity Exchange Act (CEA).
The order mandates U.S. Commodity Funds to cease and desist from further violations of the CEA and CFTC regulations. The $2.5 million civil monetary penalty is being shared with the Securities and Exchange Commission (SEC), which simultaneously filed and settled parallel charges against U.S. Commodity Funds and USO. The CFTC will offset any penalty payments made to the SEC as part of the settlement.
The SEC’s involvement highlights the coordinated effort between regulatory bodies to address financial misconduct. The case was handled by Alejandra de Urioste, Lara Turcik, Trevor Kokal, K. Brent Tomer, Lenel Hickson Jr., and Manal M. Sultan of the CFTC’s Division of Enforcement.
Source: CFTC.gov
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