U.S. COMMODITY FUTURES TRADING COMMISSION SETTLES CASE WITH FORMER ELECTRICITY TRADER FOR EXECUTING ILLEGAL WASH TRADES
Trader Agrees to Cooperate
WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against Joseph B. Knauth, Jr., a former electricity trader, for engaging in illegal wash trading on an electronic trading platform.
The CFTC order, issued on May 10, 2004, finds that on five occasions between April and June 2000, Knauth executed prearranged trades for electricity contracts at identical prices. On each occasion, according to the order, Knauth agreed to execute a buy and a sell order on the electronic trading platform and immediately to reverse the transaction by bilaterally executing over the telephone an equal and opposite buy and sell. The order finds that these trades resulted in a financial nullity.
The CFTC order also finds that Knauth violated the Commodity Exchange Act’s (CEA's) prohibition against illegal wash sales. The order further finds that because Knauth caused prices to be recorded on the electronic trading platform that were not true and bona fide, the transactions resulted in the reporting of non-bona fide prices.
The order directs Knauth to cease and desist from further violations of specified provisions of the CEA, to pay a $25,000 civil penalty, and to comply with specified undertakings, including an undertaking to provide future cooperation to the government in its ongoing investigations and litigation of related matters. In consenting to the entry of the CFTC’s order, Knauth neither admitted nor denied the findings made in the order. A copy of the CFTC order may be found at www.cftc.gov.
The following Division of Enforcement staff were responsible for this case: Kim Bruno, William O. Hoar, Maura Viehmeyer, Laura Gardy, Michael Solinsky, Gretchen L. Lowe, and Richard Wagner.
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