For Release: March 26, 2003
CFTC SUES NATURAL GAS TRADER FOR FRAUD
Christopher Chapman Ordered to Pay $240,000 in Penalties, Among Other Sanctions
WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of a proceeding against Christopher Chapman of East Brunswick, New Jersey. The CFTC issued an order finding that Chapman, a natural gas trader employed by a private company, had engaged in a fraudulent trading scheme in which he directed losing trades to his employer and profitable trades to an account that he opened and controlled.
According to the order, filed on March 25, 2003, Chapman, through this scheme, evaded the competition of the open market and ensured a risk-free personal profit in the account he controlled. Chapman’s trading took place on the ACCESS electronic trading platform of the New York Mercantile Exchange, Inc. (NYMEX).
According to the order, Chapman carried out the scheme from December 2001 to March 2002 by entering identical buy and sell limit orders for natural gas, where one of those orders was entered on behalf of the account he controlled and the other on behalf of his employer. Subsequently, these orders were offset in the same manner, resulting in two round-turn trades, one profitable and the other unprofitable. According to the order, due to the illiquidity of the market for the trades in this scheme, Chapman was able to control both the buy and sell positions and prices for both the initial and offsetting trades, resulting in the account he controlled profiting over $700,000 and his employer’s account suffering similar losses.
The CFTC order requires Chapman to cease violating the Commodity Exchange Act and to pay a civil monetary penalty of $240,000. The order also imposes a lifetime trading ban on Chapman and requires him to comply with certain undertakings, including never to seek registration with the CFTC in any capacity.
In consenting to the entry of the order and the findings of the order, Chapman neither admitted nor denied the findings of the order or the allegations of the complaint.
The CFTC appreciates the assistance the NYMEX staff provided in this investigation.
The following CFTC Division of Enforcement staff were responsible for this case: Stephen J. Obie, Lenel Hickson, Beth R. Morgenstern, and Steven Ringer.
Enforcement Case Media Contact:
Stephen J. Obie, CFTC Eastern Regional Office
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