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• In re EMF Fin. Products, LLC
  
  On November 13, 2009, the Commission simultaneously filed and settled an administrative enforcement action against registered CPO and CTA EMF Financial Products, LLC (EMF) finding that it made false statements and failed to disclose material information concerning its market positions and financing to the CBOT and that EMF also failed to diligently supervise the handling of its commodity interest business. Specifically, the order finds that, in August 2005, EMF concealed and misrepresented material information about its positions and financing as the CBOT was conducting surveillance on the September 2005 U.S. Treasury Note Futures Contract (the September 2005 Contract) that was expiring on September 30. Prior to the commencement of the delivery period on the September 2005 Contract, EMF misrepresented and failed to disclose to the CBOT its full position in, and control of, up to $11.9 billion of the underlying cheapest-to-deliver (CTD) security on the September 2005 Contract at the same time that it held a significant, large long position in the September 2005 Contract. The order further finds that EMF eventually fully disclosed the information to the CBOT and that an orderly liquidation of the September 2005 Contract occurred. The Commission also found that EMF did not have: appropriate oversight procedures in place to manage and control the large concentrated positions taken by its traders; and policies and procedures in place to oversee communications with regulators to ensure that full, complete and truthful information was provided in a timely fashion.
  
  The Commission assessed sanctions, including: a $4 million civil monetary penalty; a three-year registration restriction; and an order to comply with certain undertakings, including 1) reporting requirements to the CFTC related to its trading, 2) establishing and maintaining a risk management committee, 3) designing and implementing a system of internal controls, policies and procedures, and 4) submitting a report on its compliance with the undertakings to the CFTC. The Commission received cooperation from the Federal Reserve Bank of New York and the U.S. Securities and Exchange Commission in connection with this matter. In re EMF Fin, Products, LLC, CFTC Docket No. 10-02 (CFTC filed Nov. 13, 2009).
  
  
• In re Moore Capital Mgmt, L.P., et al.
  
  On April 29, 2010, the Commission simultaneously filed and settled an administrative action against Moore Capital Management, LP (MCM), Moore Capital Advisors, LLC (MCA), and Moore Advisors, Ltd. (MA). MCM is a registered CTA, and a principal of MCA; MCA is a registered CTA and CPO; MA is a registered CPO. The order finds that, since at least November 2007 through May 2008, a former MCM portfolio manager attempted to manipulate the settlement prices of NYMEX platinum and palladium futures contracts by engaging in a practice known as “banging the close.” The order also found that MCM failed to diligently supervise the handling of MCM’s commodity interest business. The Commission assessed sanctions, including: a cease and desist order; three-year registration restriction; and a joint and several $25 million civil monetary penalty; and an order to comply with certain undertakings, including a two-year restriction on their trading within 15 minutes of and during the closing period of the platinum and palladium futures and options markets. The CFTC order further requires respondents to: (1) implement a policy requiring certain non-equity trade related communications to be recorded, maintained and reviewed; and (2) submit a report to the Commission on their compliance with the undertakings. The CFTC received cooperation from the CME Group (NYMEX) in connection with this matter. In re Moore Capital Mgmt, L.P., et al., CFTC Docket No. 10-09 (CFTC filed Apr. 29, 2010).
  
  
• In re Morgan Stanley Capital Group, Inc.
  
  On April 29, 2010, the Commission simultaneously filed and settled an administrative enforcement action against Morgan Stanley Capital Group, Inc. (Morgan Stanley) in connection with Morgan Stanley concealing from the NYMEX the existence of a large Trade at Settlement (TAS) block crude oil trade. As discussed separately, the Commission simultaneously filed and settled an administrative enforcement action against UBS Securities on the same day for aiding and abetting that concealment. The CFTC order required that Morgan Stanley pay a $14 million civil monetary penalty and also required Morgan Stanley to cease and desist from further violations of the Commodity Exchange Act and to comply with certain undertakings. The order further found that, in early February 2009, a Morgan Stanley trader and a UBS broker discussed an opportunity for Morgan Stanley to act as a counterparty to a third-party UBS customer to purchase a block of March 2009 crude oil futures contracts and to sell a block of a similar quantity of April 2009 contracts on the NYMEX. The price of the two legs of the trade was to be determined later by the market closing price, an arrangement known as a TAS (Trade at Settlement) block trade.
  
  The order found that, on February 6, 2009, prior to the trade being finalized, the Morgan Stanley trader requested that the UBS broker not report the TAS block trade until after the close of trading. The UBS broker agreed to this arrangement and did not report the trade until after the market closed. As a result, the CFTC order found that Morgan Stanley’s and UBS’s actions concealed the occurrence of the trade from the NYMEX, contrary to NYMEX Rule 6.21C(6), which provided that the “buyer and seller must ensure that each block trade is reported to the Exchange within five minutes of the time of execution.” In addition to the civil monetary penalty, Morgan Stanley agreed for the next three years to: 1) notify all Morgan Stanley traders of significant new and modified trading rules; 2) administer a yearly enhanced training program regarding CFTC and exchange trading rules for all appropriate Morgan Stanley employees; and 3) implement, within 90 days, enhanced surveillance of TAS block trades on the NYMEX. The CFTC received cooperation from the New York County District Attorney’s Office in connection with this matter. In re Morgan Stanley Capital Group, Inc., CFTC Docket No. 10-10 (CFTC filed Apr. 29, 2010).
  
  
• In re UBS Securities Inc.
  
  On April 29, 2010, the Commission simultaneously filed and settled an administrative enforcement action against UBS Securities Inc. (UBS) in connection with UBS’s aiding and abetting the concealment by Morgan Stanley Capital Group (Morgan Stanley) of the existence of a large Trade at Settlement (TAS) block crude oil trade on the New York Mercantile Exchange (NYMEX). As discussed separately, the Commission simultaneously filed and settled an administrative enforcement action against Morgan Stanley. The CFTC order required that UBS pay a $200,000 civil monetary penalty. The order also found that, in early February 2009, a Morgan Stanley trader and a UBS broker discussed an opportunity for Morgan Stanley to act as a counterparty to a third-party UBS customer to purchase a block of March 2009 crude oil futures contracts and to sell a block of a similar quantity of April 2009 contracts on the NYMEX. The price of the two legs of the trade was to be determined later by the market closing price, an arrangement known as a TAS (Trade at Settlement) block trade. The order further found that, on February 6, 2009, prior to the trade being finalized, the Morgan Stanley trader requested that the UBS broker not report the TAS block trade until after the close of trading. The UBS broker agreed to this arrangement and did not report the trade until after market close. Based on this, the CFTC order further found that the actions by UBS, along with those of Morgan Stanley concealed the occurrence of the trade from the NYMEX, contrary to NYMEX Rule 6.21C(6). The CFTC received cooperation from the New York County District Attorney’s Office in connection with this matter. In re UBS Securities Inc., CFTC Docket No. 10-11 (CFTC filed Apr. 29, 2010).
  
  
• CFTC v. Midwest Land & Livestock, Inc., et al.
  
  On September 8, 2010, the Commission filed a civil injunctive action charging Mark Alan Vanderploeg and his companies, Midwest Land & Livestock, Inc., SKV Farms Inc. and DCV Farms, Inc., with false reporting in connection with a fraudulent scheme perpetrated on grain elevators and cooperatives (grain entities) in Kansas, Iowa, Minnesota, Illinois and South Dakota. Vanderploeg and his companies pretended to be farmers. In doing so, they entered into forward contracts with the grain entities for more than one million bushels of grain during the 2008 harvest, despite the fact that the defendants, unknown to the grain entities, lacked the ability to produce the contracted-for grain, according to the complaint. As part of these transactions, and to hedge risks associated with these forward contracts, the grain entities entered into “short” commodity futures contracts. The common practice in the grain industry is for grain entities to share monetary gains that may result from hedge positions with farmers when a forward contract is cancelled due to a farmer’s inability to produce the contracted-for grain, according to the complaint. Just prior to the 2008 harvest, defendants informed many of the grain entities that the defendants would be unable to deliver the contracted-for grain, which effectively cancelled their forward contracts. The complaint further alleges that where grain prices decreased, resulting in corresponding gains in the short futures positions, in many instances the defendants successfully demanded that the grain entities share with defendants their hedging gains. However, where grain prices increased, resulting in corresponding losses in the short futures positions, in almost all instances defendants failed to deliver any grain and simply disappeared. In a few instances, defendants purchased grain and delivered it to the grain entities, according to the complaint. As a result of their scheme, defendants made at least $209,000 in ill-gotten gains and the grain entities incurred net losses of $112,400 on futures positions, according to the complaint. On September 9, 2010, the court entered a statutory restraining order freezing assets and preserving books and records. The Commission received cooperation from the Kansas Bureau of Investigation, the Kansas Attorney General’s Office, the Iowa Attorney General’s Office and the Minnesota Attorney General’s Office in connection with this matter. CFTC v. Midwest Land & Livestock, Inc., et al., No. 10-2490-EFM (D. Kan. filed Sept. 8, 2010).
  
  
• In re Vitol, Inc., et al.
  
  On September 14, 2010, the Commission simultaneously filed and settled an administrative enforcement action against Vitol Inc. (VIC) and Vitol Capital Management Ltd. (VCM) finding that they willfully failed to disclose material facts to the NYMEX concerning the relationship between the two companies. Both firms are non-clearing members of the NYMEX. The order finds that, as a result of VIC’s and VCM’s willful failure to disclose material facts, the NYMEX/CME Group did not aggregate the market positions of the two companies for position limit and accountability limit purposes until March 2009, almost two years after VIC and VCM learned of NYMEX’s misperception in June 2007. The Commission assessed sanctions, including: a cease and desist order; and a joint and several $6 million civil monetary penalty. The Commission received cooperation from the NYMEX, the United Kingdom Financial Services Authority and the Swiss Financial Market Supervisory Authority in connection with this matter. In re Vitol, Inc., et al., CFTC Docket No. 10-17 (CFTC filed Sept. 14, 2010).

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