August 16, 2010
CFTC Sanctions ConAgra Trade Group, Inc. $12 Million for Causing a Non-Bona Fide Price to Be Reported in the NYMEX Crude Oil Futures Contract
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against ConAgra Trade Group, Inc. (CTG) for causing a non-bona fide price to be reported in the New York Mercantile Exchange, Inc. (NYMEX) crude oil futures contract on January 2, 2008.
The CFTC order imposes a $12 million civil monetary penalty on CTG. The order also requires CTG to cease and desist from further violations and to take certain steps to improve its compliance and ethics program.
On January 2, 2008, CTG was the first to purchase NYMEX crude oil futures contracts at the then-historic price (also known as a “print”) of $100, the order finds. As a result of CTG’s effort to be the first to trade at the $100 level, CTG caused a non-bona fide price to be reported, according to the CFTC order. At the time, NYMEX’s electronic market was trading approximately 40 cents lower.
The CFTC order finds that on the morning of January 2, 2008, one of CTG’s traders told CTG’s floor broker that the trader was going to be a “madman” if crude oil prices reached within 25 cents of $100. Shortly after the trade was executed, another NYMEX floor trader complained to NYMEX officials that he was holding an offer to sell crude oil futures at the better price of $99.90 that had been violated. The NYMEX Floor Committee took down the $100 print from the NYMEX price change register. The order also finds that CTG, to preserve the contract at the $100 price, instructed its floor broker to buy all of the contracts then being offered at $99.90 to, in the words of one CTG trader, “keep the $100 print up.”
After getting the historic $100 print on January 2, 2008, one of CTG’s traders bragged about the trade to other market participants. The trader said that CTG had instructed its floor broker that CTG had wanted to get the $100 print for as long as three months prior to January 2, 2008, and that “we weren’t gonna let that one get away from us” and “you know hey we [were] not gonna miss this one you know. This is the big one.” The trader also bragged in an email that “[s]ome people collect art prints, we collect price prints.”
In addition to paying the civil monetary penalty, CTG agrees to comply with undertakings regarding its compliance and ethics program, including appointing an independent person to the Board of Directors, forming a Compliance Committee of the Board and providing enhanced compliance training.
The CFTC thanks the NYMEX for its assistance with this investigation.
CFTC staff members responsible for this case are: Michael M. McLaughlin, Eliud Ramirez, David Oakland, R. Stephen Painter, Jr., Michael A. Penick, Nathan Ploener, Karin N. Roth, David W. MacGregor, Manal Sultan, Lenel Hickson, Jr. and Vincent A. McGonagle.
Last Updated: August 16, 2010