December 21, 2010
CFTC Orders Registered Floor Broker Thomas Carroll and Trader R. Scott Hopkins to Pay Civil Monetary Penalties Totaling $700,000 for Engaging in a Fraudulent Trade Allocation Scheme
CFTC order permanently prohibits defendants from trading and registering.
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against registered floor broker Thomas Carroll of Mahwah, N.J., and the head of trading for a natural gas delivery company, R. Scott Hopkins of Plano, Texas, for engaging in a fraudulent trade allocation scheme.
The CFTC order requires Hopkins to pay a $650,000 civil monetary penalty and Carroll to pay a $50,000 civil monetary penalty. The order also imposes permanent trading and registration bans on Carroll and Hopkins.
According to the CFTC order, entered on December 10, 2010, from approximately January 2006 to May 2009, Carroll and Hopkins engaged in a trade allocation scheme in which they typically entered an order to buy or sell natural gas futures contracts and directed that the fill for that order to be placed in Hopkins’ personal account. If the market then moved in a direction that made the filled order unprofitable, Carroll and Hopkins transferred the losing trade from Hopkins’ personal account to his employer’s account and offset it for a loss to Hopkins’ employer. Winning trades were kept in Hopkins’ personal account. Through this scheme, Carroll and Hopkins engaged in a risk-free trading strategy for Hopkins and defrauded Hopkins’ employer, the order finds.
Hopkins attempted to conceal his involvement in the fraudulent scheme by deleting his name and inserting his employer’s name on certain trading account statements, the order finds.
The CFTC action resulted from a joint CFTC cooperative enforcement investigation with the New York County District Attorney’s Office (NYCDAO) of abusive trading practices on the NYMEX, a CME Group Exchange. In related matters based on the same conduct, Hopkins pled guilty to the state felony crime of Forgery in the Second Degree for which the NYCDAO has recommended a sentence of probation, forfeiture of $650,000, a criminal fine of $5,000, certification that restitution has been made and 250 hours of community service. Carroll pled guilty to the state misdemeanor crime of Criminal Facilitation in the Fourth Degree and was sentenced to a conditional discharge.
The CFTC appreciates the assistance of the NYCDAO and the CME Group.
The CFTC Division of Enforcement staff members responsible for this case are Philip Rix, Elizabeth C. Brennan, Steven Ringer, Lenel Hickson and Stephen J. Obie.
Last Updated: December 21, 2010