Release: 4832-03 (CFTC Docket No: 03-23)
For Release: August 20, 2003

COMMODITY FUTURES TRADING COMMISSION SUES RELATED BRAZILIAN AND BRITISH VIRGIN ISLANDS COMPANIES FOR EXECUTING ILLEGAL NON-COMPETITIVE TRADES ON U.S. MARKETS

WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of a proceeding against Casas Sendas Comercio E Industria S.A. (Casas Sendas) and Café Nord Corporation (Café Nord). The CFTC issued an order finding that in July 2000, Casas Sendas, a Brazilian corporation, and Café Nord, a British Virgin Islands corporation, executed at least nine non-bona fide Exchange of Futures for Physicals transactions (EFPs). These transactions were posted on the Coffee, Sugar & Cocoa Exchange (CSCE), a division of the New York Board of Trade (NYBOT), and involved the alleged transfer of coffee futures and physical coffee. The trading in both accounts was under common control.

The CFTC’s order, issued on August 18, 2003, found that none of the nine EFPs involved the actual transfer of physical coffee. Instead, according to the order, each transaction was simply a noncompetitive transfer of futures at an agreed-upon price, which resulted, and was intended to result, in a profit for one party and a loss for the other. The order found that the EFP transactions therefore were illegal noncompetitive trades that constituted wash sales and resulted in the reporting of non-bona fide prices in violation of the Commodity Exchange Act (CEA).

The order directs Casas Sendas and Café Nord to:

  1. cease and desist from further violations of the CEA;
  2. pay a $10,000 civil penalty each; and
  3. comply with specified undertakings, including undertakings that neither Casas Sendas nor Café Nord shall engage in any EFPs in which the physical commodity coffee is actually transferred or reported as being transferred from Café Nord to Casas Sendas.

A copy of the CFTC order may be found at http://www.cftc.gov.

The following Division of Enforcement staff were responsible for this case: John Dunfee, Richard Glaser, Karen Kenmotsu, and Gretchen L. Lowe

Media Enforcement Contact:
Richard Glaser, Associate Director
CFTC Division of Enforcement, (202) 418-5358

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