For Release: September 28, 2007
French Company Banque CIAL Agrees to Pay Civil Penalty to Settle U.S. Commodity Futures Trading Commission Charges that it Engaged in Wash Sales in the Treasury Futures Markets
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the issuance of an order filing and simultaneously settling charges against CIC Banque Credit Industriel D’Alsace Et De Lorraine Société Anonyme (Banque CIAL), based in Strasbourg, France, for engaging in wash sales in the Five Year and Two Year Treasury Note Futures Markets on June 30, 2004. Banque CIAL is part of Crédit Industriel et Commercial (CIC), a French banking group.
The CFTC order finds that on June 30, 2004, a trader at Banque CIAL in France placed orders through a Canadian broker to simultaneously buy and sell 2,940 contracts of September 2004 Five Year Treasury Note futures contracts. After being transmitted to a U.S. broker, the orders were executed by brokers on the trading floor of the Chicago Board of Trade at the same price and approximately at the same time.
Upon receiving confirmations for the Five Year Note futures, the Banque CIAL trader placed a second set of orders to simultaneously buy and sell 2,363 contracts of September 2004 Two Year Treasury Note futures contracts. These orders were also executed at approximately the same time and at the same price on the Chicago Board of Trade.
These transactions were not intended to make a profit or loss for Banque CIAL or expose Banque CIAL to market risk, and they did not result in a net change in market position. Indeed, Banque CIAL’s avowed purpose in entering the transactions was to assess its internal risk management system. Accordingly, the CFTC order finds that these transactions constituted prohibited wash sales, in that the transactions Banque CIAL initiated were designed to give the appearance of submitting trades to the open market, while avoiding risks of loss from market fluctuation.
In addition to paying a civil monetary penalty of $80,000, Banque CIAL agreed to implement compliance procedures that insure that transactions made by it on United States markets fully comply with all laws, rules and regulations governing those markets.
The following CFTC Enforcement Division staff were responsible for the case: Louis Traeger, Ralph DerAsadourian, William Janulis, Scott Williamson, Rosemary Hollinger and Richard Wagner
Last Updated: September 28, 2007