FORMER HEDGE FUND MANAGER TO PAY $1 MILLION PENALTY

The following case is an excerpt from the CFTC website: “Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and simultaneously settling charges that Christopher Louis Pia of North Castle, N.Y., while employed as portfolio manager for Moore Capital Management, LLC (Moore Capital), attempted to manipulate the settlement prices of palladium and platinum futures contracts on the New York Mercantile Exchange (NYMEX). Moore Capital is a predecessor of Moore Capital Management, LP. The CFTC order requires Pia to pay $1 million civil monetary penalty. It also permanently bans Pia from trading CFTC-regulated products during the closing period of the markets and from trading CFTC-regulated products in platinum and palladium. The order further requires Pia to distribute a copy of the CFTC order to current investors and to current and future employees, principals, and officers and to provide a disclosure document setting out the CFTC action to existing and prospective clients. The CFTC order finds that, from at least November 2007 until May 2008 (relevant period), Pia attempted to manipulate the settlement prices of palladium and platinum futures contracts by engaging in a trading practice known as “banging the close.” Specifically, Pia caused to be entered market-on-close buy orders that were executed in the last ten seconds of the closing period for both contracts in an attempt to exert upward pressure on the settlement prices of the futures contracts. Pia engaged in this trading strategy at Moore Capital frequently throughout the relevant period, the order finds. According to CFTC Division of Enforcement Director David Meister: “To protect market participants and promote market integrity, individuals who attempt to manipulate commodity prices must and will be held personally accountable. As demonstrated by today's action, the Commission will not hesitate to impose significant sanctions on such traders.” The CFTC order further requires that a monitor ensures Pia’s compliance with the order for a five-year period and establishes undertakings related to any entity Pia owns or controls. The order also imposes registration conditions if Pia or any of his entities become registered with the CFTC for a period of five years from the date of the order. Within 120 days of the issuance of the order, Pia must submit a report to the Commission on his compliance with the undertakings required in the order. On April 29, 2010, the CFTC issued an order filing and settling similar charges of attempted manipulation of platinum and palladium futures settlement prices in 2007 – 2008 and supervisory violations against Moore Capital Management, LP (MCM), Moore Capital Advisors, LLC (MCA), both based in New York, N.Y., and Moore Advisors, Ltd. (MA), a Bahamian entity. The CFTC order required MCM, MCA, and MA jointly and severally to pay a $25 million civil monetary penalty and placed restrictions on their CFTC registrations, including a two-year restriction on trading during the closing periods of the palladium and platinum futures and options markets (see CFTC Press Release 5815-10, April 29, 2010). The CFTC thanks the CME Group, the parent company of the NYMEX, for its assistance.”