Release: 5081-05 (CFTC Docket No. 05-10)
U.S. COMMODITY FUTURES TRADING COMMISSION CHARGES HUGH J. MADDOX WITH FRAUDULENT TRADE ALLOCATION SCHEME
Washington, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) announced today the filing and simultaneous settlement of an administrative enforcement action that resulted in a consent order finding that Hugh J. Maddox of Tulsa, Oklahoma, participated in a fraudulent trade allocation scheme that defrauded Maddox’s employer at that time, ONEOK Energy Marketing & Trading Company, LP (now ONEOK Energy Services).
The CFTC’s order finds that, from approximately May 2003 through February 2004, Maddox engaged in a fraudulent scheme with others to skim profits from ONEOK’s trading of natural gas futures contracts on the New York Mercantile Exchange. According to the order, Maddox entered orders to a clerk on the floor of the New York Mercantile Exchange to buy and sell natural gas futures. The order finds that Maddox then coordinated with the clerk to allocate certain profitable trades that rightfully belonged to ONEOK to Maddox and his associates, and to allocate certain losing trades to ONEOK. In this manner, the order finds, Maddox and others misappropriated about $64,000. The order also finds that Maddox deceived ONEOK regarding the handling of its futures trading.
According to the order, Maddox’s wrongful trade allocation scheme violated anti-fraud provisions of the Commodity Exchange Act. The CFTC ordered Maddox to cease and desist from further violations and to pay $25,000 as a civil monetary penalty, and $31,000 in restitution for his part in the scheme. The order further imposes on Maddox a personal trading ban of one year and bars him from seeking registration with the CFTC, or acting in any capacity requiring CFTC registration, for three years.
In consenting to entry of the order, Maddox neither admitted nor denied the findings in the order.
The following Division of Enforcement members were responsible for the case: William Hoar, Anne Termine, Lacey Dingman, Kathleen Banar, Richard Glaser, and Richard Wagner.
# # #