August 4, 2014
Washington, DC –The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Kimba M. Wood of the U.S. District Court for the Southern District of New York entered a Consent Order against Defendant John Aaron Brooks for defrauding Citigroup, Inc. and Citigroup Energy, Inc. (collectively, Citi) by mismarking and inflating the value of his position in ethanol futures in Citi’s proprietary account. Brooks currently resides in Houston, Texas.
The court’s Order requires Brooks to pay a $500,000 civil monetary penalty. The Order also permanently bans Brooks from registering with the CFTC; bans him for seven years from trading any CFTC-regulated products for or on behalf of others; and bans him for five years from trading, or having others trade, CFTC-regulated ethanol products on his behalf. The Order further permanently enjoins Brooks from violating the Commodity Exchange Act (CEA) and a CFTC Regulation, as charged.
The Order finds that from November 2010 through October 2011 (the Relevant Period), Brooks was employed by Citicorp North America Inc. and served as a Director in the commodities business of Citigroup, Inc. According to the Order, Brooks cheated and defrauded Citi by inflating and mismarking the value of his position in New York Mercantile Exchange (NYMEX) Chicago Ethanol (Platts) Futures contracts (NYMEX ethanol futures) in Citi’s proprietary account, by misrepresenting his profits and losses to Citi, and by knowingly offsetting and masking the losses in his other futures positions. The Order finds that, by this conduct, Brooks violated the anti-fraud provisions of the CEA and a CFTC Regulation.
Additionally, the Order finds that at the end of each trading day during the Relevant Period, Brooks knew or recklessly disregarded the fact that he was entering false values for NYMEX ethanol futures into Citi’s computer system. The total losses to Citi as a result of Brooks’s mismarking were approximately $42.4 million.
The court’s Order, entered on August 1, 2014, stems from a CFTC Complaint filed on September 27, 2013, that charged Brooks with, among other things, employing manipulative or deceptive devices and contrivances, cheating and defrauding, and concealing trading losses from a large commercial bank and its affiliate by inflating the value of NYMEX ethanol futures, in violation of the CEA and a CFTC Regulation (see CFTC Press Release and Complaint 6716-13).
CFTC staff members responsible for this case are Janine Gargiulo, Michael Geiser, Trevor Kokal, David Acevedo, Lenel Hickson, and Manal Sultan.
Last Updated: August 4, 2014