Release Number 8457-21
CFTC Orders United States Commodity Funds LLC to Pay $2.5 Million for Failure to Fully Disclose Information Relating to Trading Limitations to Commodity Pool Participants
November 08, 2021
Washington, DC The Commodity Futures Trading Commission today simultaneously filed and settled charges against United States Commodity Funds LLC (U.S. Commodity Funds), a registered commodity pool operator (CPO), for failing to fully disclose certain position limits that its futures commission merchant imposed on one of the commodity pools it managed, United States Oil Fund, LP (USO).
The order imposes a $2,500,000 civil monetary penalty on U.S. Commodity Funds and orders it to cease and desist from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
“Complete, timely, and accurate disclosure to commodity pool participants is a fundamental obligation for a CPO under the CEA,” said Acting Director of Enforcement Vincent McGonagle. “As demonstrated by today’s action, we and our regulatory partners will aggressively pursue those who do not meet their disclosure obligations.”
Specifically, the order finds that from about April 22, 2020 to June 12, 2020, U.S. Commodity Funds failed to fully disclose to commodity pool participants that USO’s only futures commission merchant had imposed certain position limits on USO that would render the pool unable to purchase additional futures contracts in connection with the future offering of new exchange traded fund shares. This failure to disclose material information to commodity pool participants operated as a fraud on those participants.
Related Civil Action
In a parallel matter, the Securities and Exchange Commission (SEC) today announced that it has entered an order simultaneously filing and settling charges against U.S. Commodity Funds and USO and imposing a civil monetary penalty. Collectively, U.S. Commodity Funds together with USO have agreed to pay $2.5 million in penalties to settle the parallel cases as the CFTC order will recognize and offset a portion of any civil monetary penalty payment made to the SEC in connection with this action.
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The CFTC thanks the SEC for its assistance in connection with this matter.
The Division of Enforcement staff members responsible for this case are Alejandra de Urioste, Lara Turcik, Trevor Kokal, K. Brent Tomer, Lenel Hickson Jr., and Manal M. Sultan.