December 2, 2015
CFTC Orders Arya Motazedi to Pay a Civil Monetary Penalty and Restitution and Bans Him from Trading and Registration for Engaging in Gas and Crude Oil Futures Transactions that Defrauded His Employer
Motazedi Misappropriated His Employer’s Confidential, Non Public, and Material Trading Information
Washington DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Arya Motazedi of Miami, Florida, for engaging in fraudulent transactions in the New York Mercantile Exchange’s (NYMEX) RBOB Gasoline Physical futures contract and CL Light Sweet Crude Oil futures contract involving two personal accounts he owned or controlled and a company account he traded for his former employer.
According to the Order, between September 3 and November 26, 2013, Motazedi noncompetitively prearranged at least 34 trades between his former employer’s account and the personal accounts at prices which disadvantaged his former employer’s account, in that Motazedi caused the employer’s account to buy at higher prices and sell at lower prices in trades opposite the two personal accounts. The Order also states that Motazedi defrauded his employer by placing orders for the personal accounts ahead of orders he placed for his former employer’s account (a practice known as “front running”) on at least 12 occasions, and thereby generated additional profits for himself to the detriment of his former employer. According to the Order, Motazedi’s trading activity caused his former employer $216,955.80 in trading losses.
The Order finds that Motazedi accomplished his fraud by misappropriating non-public, confidential, and material information. According to the Order, Motazedi and his employer shared a relationship of trust and confidence that gave rise to a duty of confidentiality. In addition, his employer’s internal policies prohibited the misuse of proprietary or confidential information, and prohibited employees from engaging in personal transactions involving energy contracts and other personal transactions that created an actual or potential conflict of interest. Based on his position as a gasoline futures trader, Motazedi routinely had access to material non-public information concerning the times, volume, and prices at which his employer intended to trade energy commodity futures for its proprietary account. As the Order further finds, Motazedi breached his duties to his employer by using this information to trade in personal trading accounts and by failing to disclose such trading to his employer.
The Order requires Motazedi to pay a civil monetary penalty of $100,000 and restitution in the amount of $216,955.80 for the benefit of his former employer. It also permanently bans him from trading and registering as a futures professional in any capacity with the CFTC.
The CFTC’s Enforcement Division thanks the staff of the CME Group’s Market Regulation Department for its cooperation.
Separately, CME announced on December 2, 2015, that it had entered an order against Motazedi based upon the same conduct.
CFTC Division of Enforcement staff members responsible for this case are Jon J. Kramer, Judith S. McCorkle, David A. Terrell, Scott R. Williamson, and Rosemary Hollinger.
Last Updated: December 2, 2015