September 29, 2016

CFTC Orders Angus Partners LLC D/B/A Angus Energy to Pay a $250,000 Civil Penalty for Acting as an Unregistered Commodity Trading Advisor and for Disclosure Violations

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it entered an Order requiring Angus Partners LLC D/B/A Angus Energy (Angus), a Florida limited liability company with its principal place of business in Fort Lauderdale, Florida, to pay a $250,000 civil monetary penalty for acting as an unregistered Commodity Trading Advisor (CTA) and for violating certain disclosure rules applicable to CTAs.

The Order finds that, since at least October 2012, Angus, for compensation or profit, engaged in the business of advising more than 15 clients as to the value of or the advisability of trading in over-the-counter (OTC) commodity option and swap contracts and held itself out generally to the public as a CTA without being registered as such with the CFTC. The order also finds that Angus failed to adequately disclose to its clients certain conflicts of interest.

Specifically, the Order finds that Angus’s clients are retailers of heating oil, natural gas, and other fuel products. According to the Order, for compensation or profit, Angus advised its clients on the development and implementation of fuel hedging programs to mitigate the clients’ exposure to price movements in the fuel oil markets. These hedging strategies entailed the clients purchasing and selling OTC commodity option and swap contracts, the Order finds. The Order also finds that Angus marketed itself as an expert in helping its clients devise optimal hedging strategies, uniquely tailored to each client’s business. According to the Order, Angus’s marketing materials, including its website, gave clients the clear impression that Angus would act in its clients’ best interest.

As set forth in the Order, Angus failed to adequately disclose the conflict between, on the one hand, advising clients on the merits of entering into commodity option and swap transactions and, on the other hand, Angus’s financial interest in those same transactions. Specifically, Angus was the counterparty to its clients’ option and swap contracts – a fact of which certain clients were not aware. Moreover, Angus did not disclose that a markup – effectively, a transaction fee – was embedded in the premium price the clients paid to Angus for the options transactions and that Angus retained the markup.

In addition to the civil penalty, the CFTC orders Angus to cease and desist from further violations of the CTA registration provision of the Commodity Exchange Act and disclosure regulations, as charged.

The CFTC staff members responsible for this matter are Sam Wasserman, Alben Weinstein, Elizabeth May, David Acevedo, Lenel Hickson, Jr., and Manal M. Sultan of the Division of Enforcement.

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Last Updated: September 29, 2016