Washington, D.C. — The Commodity Futures Trading Commission’s Market Participants Division today issued an interpretation concerning capital and financial reporting obligations for swap dealers (SDs) and major swap participants (MSPs) that compute minimum capital requirements based on the respective firm’s tangible net worth.
The interpretation clarifies that a non-bank SD that utilizes the tangible net worth method of calculating net capital may satisfy the requisite eligibility tests at either the non-bank SD entity level or at the level of the entity’s ultimate consolidated parent. 
The interpretation also clarifies that certain non-bank SDs and non-bank MSPs that maintain books and records in accordance international financial reporting standards (IFRS) in lieu of U.S. generally accepted accounting principles (U.S. GAAP), and file financial reports with the CFTC in accordance with IFRS in lieu of U.S. GAAP, may also use IFRS in lieu of U.S. GAAP to compute tangible net worth. Finally, the interpretation clarifies that eligible non-bank SDs and non-bank MSPs utilizing the tangible net worth capital method may satisfy certain reporting requirements on a quarterly basis, rather than on a monthly basis.
The interpretation was issued in response to inquiries received from SDs in their effort to comply by October 6, 2021 under newly adopted capital and financial reporting requirements.

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Washington, D.C. — The Commodity Futures Trading Commission today filed and settled charges against Credit Suisse International, Credit Suisse Securities Europe Limited, and Credit Suisse Capital LLC (Credit Suisse entities or respondents), provisionally registered swap dealers, for failing to comply with swap data reporting obligations as a swap dealer.
According to the CFTC order, since becoming provisionally registered swap dealers, the Credit Suisse entities submitted inaccurate daily valuation data for the majority of their equity swap transactions to a swap dealer repository (SDR). The order requires the respondents to pay a $1.5 million civil monetary penalty and to cease and desist from violating the Commodity Exchange Act and CFTC regulations as charged.
Case Background
The order finds that from at least January 10, 2013 to December 2018, one or more of the Credit Suisse entities inaccurately reported particular swap data under Part 45 of CFTC regulations.  Specifically, when reporting certain equity swap transactions to an SDR, the respondents failed to comply with the requirement that they report the “daily mark” of these swap transactions. Instead, they reported the mark-to-market notional value of the underlying equity. This valuation reporting error impacted approximately 91 percent of the Credit Suisse entities’ reportable equity swap positions, and 14 percent of their overall reportable swaps. This reporting error, which was caused by a single issue in the reporting engine the respondents used, also impacted approximately 22 million messages to the SDR.
The order also finds that the Credit Suisse entities discovered the reporting error in October 2018.  They have represented that they remediated the reporting error by mid-December 2018, and that their reporting of the daily valuation field for equity swaps was accurate from that date onward. The Credit Suisse entities have further represented that they corrected the historical record of all inaccurate reports by August 18, 2020.
The CFTC thanks and acknowledges the assistance of David Aron, Meghan Tente and Tom Guerin of the Division of Data, and Fern Simmons of the Market Participants Division. The CFTC also thanks and acknowledges the assistance of the National Futures Association with this matter.
The Division of Enforcement staff responsible for this case are James Deacon, Erica Bodin, Aimée Latimer-Zayets, and Rick Glaser, and former enforcement staff member Kim Bruno.

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Joint Release
Board of Governors of the Federal Reserve SystemCommodity Futures Trading CommissionFederal Deposit Insurance CorporationOffice of Comptroller of the CurrencySecurities and Exchange Commission 
Joint Readout of Principals Meeting of UK and U.S. Authorities Regarding Central Counterparty Resolution
London and Washington – Senior officials from the Bank of England, Federal Deposit Insurance Corporation, Commodity Futures Trading Commission, Securities and Exchange Commission, and Federal Reserve Board convened a virtual meeting today to discuss certain issues relating to the concept of resolution of a central counterparty (CCP). This meeting was one of a regular series of senior-level meetings held since 2017 to share views on CCP resolution and review the progress of an ongoing program of joint work among the agencies.  
This work to date has included a review of UK and U.S. legal frameworks for resolution and analysis of the rulebooks of major UK and U.S. CCPs, thus facilitating the development of prototype resolution strategies for these CCPs. The work also has included consideration of the potential systemic impacts and operational challenges that might result from the use of resolution powers.
Over the next year, the group will continue to share analyses and discuss policy formulation in relation to CCP resolution, with the objective of facilitating progression from the development of resolution strategies to detailed operational planning.
# # #
Media Contacts:
Maggie IllingworthBank of England[email protected]
Brian SullivanFederal Deposit Insurance Corporationmailto:[email protected]
Donna Faulk-WhiteCommodity Futures Trading Commission[email protected]
Aisha JohnsonU.S.

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Washington, D.C. — The Commodity Futures Trading Commission announced today that it has filed a civil enforcement action in the U.S. District Court for the Southern District of Texas against Troy Mason of Houston, Texas and his Texas-based company, ZTegrity, Inc., charging them with fraudulent solicitation and failing to register with the CFTC as required by the Commodity Exchange Act (CEA).
On June 10, 2021 the court entered a restraining order freezing assets and requiring the preservation of documents.
In its continuing litigation, the CFTC seeks full restitution to defrauded clients, disgorgement of any ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against further violations of the CEA, as charged.
Case Background
The complaint alleges that from at least October 2019 to the present the defendants used various websites and social-media platforms to fraudulently market their forex trading pool as a version of a savings account that offered a greater yield with similarly low or no risk. The defendants called this forex trading pool “The Black Club” and “The Forex Savings Club,” which their website claimed had received over $460,000 from 411 participants.
The complaint further alleges the defendants induced participation in their forex trading pool by falsely claiming to “guarantee” to repay participants the funds they contributed to their individual “Forex Savings Accounts” and falsely offered participants “with a 100% certainty” portions of the “substantial profit[s]” to be generated using participants’ pooled funds to trade forex. Rather, as alleged in the complaint, the defendants knew or recklessly failed to appreciate that no forex trader can guarantee profitable trading, or the avoidance of losses required to guarantee all participants’ contributions, and knew, but failed to inform participants that they had no U.S.-based forex trading accounts.  
The CFTC thanks the Texas State Securities Board for its assistance in this matter.
The Division of Enforcement staff members responsible for this case are Tobias Fischer, Kyong J. Koh, Peter Haas, Luke B. Marsh, and Paul G. Hayeck.
* * * * * * *
CFTC’s Forex Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Forex Trading Fraud Advisory, to help customers identify these scams.
The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10% and 30% of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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Washington, D.C. — The Commodity Futures Trading Commission’s Market Participants Division (MPD) today issued an advisory to swap dealers clarifying the use of internal models in calculating minimum capital requirements.
The advisory clarifies that an entity dually-registered as a futures commission merchant and swap dealer (FCM/SD) or registered solely as a swap dealer (standalone SD) is not required to obtain CFTC or National Futures Association (NFA) approval to use a model to calculate the initial margin on uncleared swaps for purposes of determining the FCM/SD’s or standalone SD’s minimum capital requirement under CFTC regulations. 
Additionally, MPD clarifies that an FCM/SD or standalone SD may use an initial margin model other than the Standardized Initial Margin Model developed by the International Swaps and Derivatives Association (ISDA) for the purposes of computing the uncleared swap margin amount.
The advisory was issued in response to several inquiries MPD received from swap dealers in their effort to comply with newly adopted swap dealer capital and financial reporting requirements, which have a compliance date beginning on October 6, 2021.

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The stock market has evolved, and new trading practices have been introduced to cater to different goods and services. The CTFC was created in 1974 by the US congress as an independent federal regulatory agency. The CFTC is tasked with regulating the US derivatives markets.

The CTFC promotes competitive and efficient futures markets and protects investors against manipulation, illegal trade practices, and fraud. Any person with information about an individual or company engaging in illegal trade practices can report to the commission through a CFTC whistleblower lawyer. The CFTC is playing an important part in reducing fraud in the futures markets. 
Here is a breakdown of how the CFTC carries out its functions:

Table of Contents

Different Committees
The CFTC has five committees headed by commissioners appointed by the president of the United States. These committees have specific areas to focus on. These areas include agriculture, technology, energy and environment markets, and global markets cooperation between the CFTC and SEC. The committees are occupied by individuals such as traders and consumers. 
Regulating the Futures Markets
The CFTC requires all parties who wish to trade in the foreign exchange or make trades on behalf of other people to be registered with them. All individuals and companies that want to trade must make their statements of risk public and be honest about their dealings in the futures trading environment. The public needs to be aware of all the risks that come with trading in the futures markets.
Violations the CFTC Prevents 
The CFTC has a department that investigates violations, known as the Division of Enforcement, which investigates violations of the Commodity Exchange Act and the CFTC Regulations. The violations of the Commodity Exchange Act may include the following:
Fraud
Fraud involves the use of illegal means to gain funds from investors. Examples of fraud include Ponzi schemes, misappropriations of investor funds, issuing of false customer accounts, among others. Investors lose millions of dollars to fraudulent individuals, and the division of enforcement will investigate and prosecute all those who take part in fraudulent activities. 
Illegal Trade Practices
The CFTC regulations provide the traders with a legal and ethical way of trading in the futures markets. However, some traders might use illegal means to gain an unfair advantage over other investors. 
The commission prevents some of the illegal trade practices: fictitious sales, unauthorized swap transfers, violation of position limits, and inadequate oversight of traders.
Manipulating the Market
Some individuals or companies will attempt to manipulate the market to suit their options. An example of trying to manipulate the market is using fictitious and non-competitive transactions. The individual presents non-existent records that make other traders or companies believe the company is doing well in the market. 
Whistleblowing to the CFTC
The CFTC has a whistleblowing program that provides monetary incentives to individuals who report violations of the Commodity Exchange Act. The program provides privacy and also includes an anti-retaliation program. To become a CFTC whistleblower, you need to have original and accurate information that has yet to reach the public.  
You can fill in the information on the CFTC whistleblower program’s website, or use a CFTC whistleblower attorney to represent you. The advantage of using a CFTC whistleblower attorney is that you do not have to include your name in the TCR form. The CFTC will conduct its investigations, and if the party is found guilty of violating the CEA, you might receive an award. You can receive an award if the monetary sanctions exceed $1 million. 
Find a CFTC Whistleblower Attorney
If you have information on an individual or company that can lead to a successful CFTC action, you should report it to the commission. You could get a decent amount of money as an award for your actions. Reach out to an experienced CFTC whistleblower attorney for legal advice and representation.

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Washington, D.C. — The Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against Amaggi Exportação e Importação Ltda. (Amaggi), a corporation based in Brazil, for failing to file timely—and accurate—CFTC Form 204 reports regarding their fixed price soybean positions. The order requires Amaggi to pay a $175,000 civil monetary penalty and to cease and desist from violating CFTC Regulation 19.01.
The order finds that, on approximately 13 monthly reporting dates between January 2018 and January 2021, Amaggi held reportable positions in Form 204 commodities and failed to file the required Form 204 reports showing the quantities of the fixed purchase and sale open cash positions of such commodities it hedged, despite repeated notifications by CFTC staff. In addition, the order finds that, even after filing the missing Form 204 reports, eight of the late-filed reports were inaccurate.
Consistent with this filing, the Division of Market Oversight issued in 2013 an advisory regarding the obligation of market participants to submit accurate Form 204 Reports. [See CFTC Staff Advisory No. 13-42]
The Division of Enforcement staff members responsible for this case are Ben Sedrish, Kelly Beck, Janet Briner, David A. Terrell, Scott Williamson, and Robert Howell.

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Washington, D.C. — The Commodity Futures Trading Commission today announced that it has issued an order filing and settling charges against former introducing broker Classic Energy LLC and its owner, Mathew D. Webb of Houston, Texas for participating in a scheme to misappropriate the confidential block trade order information of Classic’s brokerage customers and facilitate fictitious trades. Webb and Classic are also charged with a scheme to defraud these brokerage customers by paying kickbacks to certain individual traders of these customers, as well as supervision violations and making false statements to ICE Futures US (ICE).
Webb and Classic admit the facts of their misconduct and acknowledge that their conduct violated the Commodity Exchange Act (CEA) and CFTC regulations.
This is the CFTC’s second enforcement against Webb and Classic. On September 30, 2019, the CFTC charged Webb and Classic with misappropriation of information, supervision, and recordkeeping violations between April 2014 and September 2015. [See CFTC Press Release No. 8030-19] Today’s order finds that Webb and Classic continued violate the CEA and CFTC regulations for an additional four years between September 2015 and November 2019. 
“This enforcement action demonstrates the CFTC’s commitment to pursuing those who misappropriate information and facilitate fictitious trading for their personal profit,” said Acting Director of Enforcement Vincent McGonagle. “Further, the CFTC will not tolerate registrants that engage in and allow such misconduct to occur and continue unabated within their firms.”
The order requires Webb and Classic to disgorge $585,000 in ill-gotten gains, to comply with undertakings to never apply for CFTC registration or engage in any activity requiring CFTC registration, and permanently bans both Webb and Classic from trading commodity interests. The order recognizes the respondents’ entry into a formal cooperation agreement with the Division of Enforcement and reserves the CFTC’s determination as to monetary sanctions based on the respondents’ agreement to cooperate.
Case Background
The order finds that from September 4, 2015 through at least January 22, 2019, Webb engaged in a scheme to misappropriate material, nonpublic block trade order information belonging to Classic’s customers. Webb did so by working in concert with certain individual traders employed by Classic’s brokerage customers to disclose block trade order information to another individual trader involved in the scheme. According to the order, this trader then used the information disclosed by Webb to arrange fictitious, non-arm’s length block trades between himself and the Classic customer at prices that allowed this trader to make a profit on offsetting trades. This trader shared these profits with Webb and the other traders involved in the scheme.
The order also finds that between at least September 4, 2015 and at least August 2019, Webb and Classic also defrauded one of their brokerage customers by paying a portion of the commissions Classic charged to the customer to certain of its traders as a kickback. According to the order, in exchange for these kickback payments, the traders directed more of the customer’s block trade business to Classic, which resulted in more commission revenue for Classic and higher profits for Webb.
The order further finds that Webb and Classic failed to diligently supervise other Classic brokers and allowed these brokers both to misappropriate material, nonpublic block trade order information from Classic’s customers and to defraud a Classic brokerage customer through kickback payments, in a manner similar to Webb. In addition, according to the order, Webb lied to ICE in the course of ICE’s investigation into the trades that were the subject of the CFTC’s September 30, 2019 order against Webb and Classic. 
Separate Criminal Action
In a separate, parallel matter, the Department of Justice’s Fraud Section today announced that Webb pleaded guilty to one count of conspiracy both to confirm the execution of fictitious trades and engage in a scheme to defraud in violation of the CEA and CFTC Regulations and to violate 18 U.S.C. § 1348(1) and 18 U.S.C § 1343. The CFTC order will recognize and offset a portion of any criminal forfeiture paid to DOJ.
The Division of Enforcement staff members responsible for this case are Alison Auxter, Clemon Ashley, Lauren Fulks, Thomas Simek, Christopher Reed, and Charles Marvine. 
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10% and 30% of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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Washington, D.C. —  The Commodity Futures Trading Commission today announced that the U.S. District Court for the Northern District of Illinois entered a consent order on June 4, resolving CFTC charges that Jiongsheng Zhao, a trader based in Australia, engaged in spoofing and manipulation in the Chicago Mercantile Exchange E-mini S&P 500 futures market in violation of the Commodity Exchange Act (CEA) and CFTC regulations.
The order prohibits Zhao from trading in commodity interests for five years, imposes $21,000 in disgorgement, and requires Zhao to cease and desist from violating the CEA’s prohibitions on spoofing and manipulation. This case was brought in connection with the Division of Enforcement’s Spoofing Task Force.
The consent order resolves the CFTC’s complaint filed against Zhao on January 28, 2018. [See CFTC Press Release No. 7688-18] On January 21, 2020, the CFTC resolved charges against Propex Derivatives Pty Ltd., a proprietary trading firm headquartered in Australia, in connection with Zhao’s spoofing. [See CFTC Press Release No. 8105-20]
Case Background
The order finds that from at least July 2012 through at least March 2017, Zhao repeatedly engaged in manipulative or deceptive acts and practices by “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution). On thousands of occasions, Zhao placed an order that he wanted to execute and thereafter entered a larger order on the opposite side of the market that he intended to cancel before execution. In placing these larger spoof orders, Zhao intentionally or recklessly sent false signals of increased supply or demand designed to trick market participants into executing against the orders he wanted filled. 
Parallel Criminal Action
In a separate, parallel criminal action brought by the Department of Justice, Zhao previously pleaded guilty to one count of spoofing and was sentenced on February 4, 2020 by the U.S. District Court for the Northern District of Illinois. 
The Division of Enforcement acknowledges and thanks the staff of the Department of Justice Fraud Section’s Commodities Fraud Group, the Federal Bureau of Investigation, the Australian Securities and Investments Commission, and the CME for their assistance.
The Division of Enforcement staff members responsible for this case are Nicholas Sloey, Allison Sizemore, Jordon Grimm, Christopher Reed, and Charles Marvine, as well as former staff member Laura Brookover.

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Washington, D.C. — The CFTC’s Market Risk Advisory Committee’s (MRAC) Interest Rate Benchmark Reform Subcommittee voted to recommend a market best practice for switching interdealer trading conventions from LIBOR to the Secured Overnight Financing Rate (SOFR) for U.S. Dollar (USD) linear interest rate swaps. This MRAC Subcommittee initiative, referred to as “SOFR First,” is the third recommendation this Subcommittee has referred to the MRAC for consideration in connection with the transition of USD derivatives and related contracts away from LIBOR. Acting Chairman Rostin Behnam is the sponsor of MRAC. 
SOFR First, a best practice modeled after the U.K.’s SONIA First, represents a prioritization of interdealer trading in SOFR rather than LIBOR. Specifically, the Subcommittee recommends that on July 26, 2021 and thereafter, interdealer brokers replace trading of LIBOR linear swaps with trading of SOFR linear swaps. This step will cause trading activity amongst swap dealers on these platforms, which account for a substantially large share of trading in the interest rate swap markets, to switch from LIBOR to SOFR. The SOFR First best practice recommends keeping interdealer brokers’ screens for LIBOR linear swaps available for informational purposes, but not trading activity, until October 22, 2021. After this date, these screens should be turned off altogether. Given most tenors of USD LIBOR will continue to be published until June 30, 2023, the Subcommittee views it as appropriate that the rate remain accessible in the interdealer market as a basis to SOFR for risk management purposes as highlighted in the U.S. banking regulators’ supervisory guidance. SOFR First recommendations are focused on the interdealer market only, and therefore do not impact availability of LIBOR linear swaps in dealer-to-client transactions.
“I commend the Interest Rate Benchmark Reform Subcommittee on the development of SOFR First and its forward-thinking approach to increasing overall SOFR derivatives trading in order to facilitate a smooth transition of exposures from LIBOR to SOFR. SOFR First’s milestone date of July 26, 2021 is consistent with, and is designed to complement, U.S. banking regulators supervisory guidance that banks should cease entering into new contracts that use USD LIBOR as a reference rate at the end of 2021. Many thanks to the Subcommittee for their hard work on this important contribution to the benchmark reform effort,” said Acting Chairman Behnam. 
The Subcommittee’s recommendations will be submitted to the MRAC for consideration. The views, analyses, and conclusions expressed regarding SOFR First reflect the work of the MRAC Interest Rate Benchmark Reform Subcommittee, and do not necessarily reflect the views of the MRAC, the Commission or its staff, or the U.S. government.
See SOFR First Frequently Asked Questions here and under Related Links.

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Washington, D.C. — The Commodity Futures Trading Commission today announced that the U.S. District Court for the Western District of Texas entered an order granting the CFTC’s motion for default judgment against defendant James Frederick Walsh of Boca Raton, Florida. The order finds that Walsh failed to answer the CFTC’s complaint charging him with fraud and failure to register with the CFTC. Walsh’s fraudulent solicitations include falsely claiming to generate increased forex trading profits as a result of the COVID-19 pandemic. This was the first enforcement action brought by the CFTC alleging misconduct tied directly to the COVID-19 pandemic.
The order requires Walsh to pay a civil monetary penalty of $555,726 and permanently enjoins him from engaging in conduct that violates the Commodity Exchange Act, from registering with the CFTC, and from trading in any CFTC-regulated markets.
Case Background
The complaint alleged that from at least September 2019 to the July 2020, Walsh fraudulently solicited members of the public for the purported purpose of trading retail foreign currency (forex) on their behalves. Using primarily social-media platforms, Walsh fraudulently marketed himself to the public as a highly successfully forex trader who earned “average monthly returns of 8% – 11%” or “a flat 3% guaranteed profit each month” for his clients. To achieve these fictitious results, Walsh falsely claimed to have access to “legal, inside information” about the direction in which forex markets will move. As alleged, Walsh had no U.S.-based forex trading accounts.
The complaint further alleged that, after he received a cease and desist letter from the Texas State Securities Board related to his fraudulent solicitations, Walsh falsely represented that he was earning even greater trading profits now that the COVID-19 pandemic had impacted the financial markets, claiming that “the returns in forex continue to grow as the rest of the financial world continues to suffer.” 
The CFTC thanks the Texas State Securities Board for its assistance in this matter.
The Division of Enforcement staff members responsible for this case are Tobias Fischer, George Malas, Timothy M. Mulreany, and Paul G. Hayeck.
* * * * * * *
CFTC’s Forex Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Forex Trading Fraud Advisory, to help customers identify these scams.
The CFTC also strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10% and 30% of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the Commodity Exchange Act.

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Washington, D.C. — The Commodity Futures Trading Commission today announced filing charges in federal court against Chicago commodity pool operators (CPOs) LJM Partners Ltd and LJM Funds Management Ltd, (collectively LJM), their Chairman, owner and registered associated person (AP) Anthony J. Caine of Colorado and Chief Portfolio Manager Anish Parvataneni of Illinois with commodity pool fraud and fraud in connection with options on futures contracts for false or misleading statements about worst-case losses, risk management, and LJM’s risk profile.
The complaint also charges LJM and Caine with failing to diligently supervise its employees and agents. According to the complaint, in January 2018 LJM had over $1 billion in assets under management, but on February 5 and 6, 2018, LJM’s portfolios suffered large trading losses (over 80%) when the Chicago Board Options Exchange’s Volatility Index (VIX) spiked over 20 points and, shortly thereafter, LJM closed its business.
The CFTC today also issued an order filing and settling fraud charges against LJM’s former Chief Risk Officer and registered AP of LJM, Arjuna Ariathurai and requiring him to pay a civil monetary penalty of $150,000, disgorgement of $83,333, along with pre-judgment interest of $14,111, and to cease and desist from further violations. The order also requires Ariathurai not to engage in certain trading related activities, apply for registration or act as a principal or agent for any CFTC registrant for three years.
In its continuing litigation against the defendants, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
“It is imperative that all participants in our markets receive full disclosure of material information and protection from fraudulent practices,” said Acting Director of Enforcement Vincent McGonagle. “When companies or individuals make false or misleading statements about the risks of trading, or fail to diligently supervise their employees or agents’ activities relating to their business as CFTC registrants, the CFTC will seek to hold them accountable.”
Case Background
The CFTC complaint alleges that from at least June 2016 through February 2018, LJM managed several commodity pools, a mutual fund, and individually managed client accounts and made several false and misleading statements to prospective and existing pool participants and others in connection with its short options trading strategies. The complaint alleges LJM represented that the worst-case scenario for its strategies was a maximum daily loss of 20% for P&G, 30% for Moderately Aggressive and 35-40% for Aggressive as calculated from LJM’s internal historical scenario analysis (i.e. events like Lehman Bros collapse 2008, Flash Crash 2010, and S&P downgrade of U.S. debt 2011). This representation was false because the worst-case scenarios were not based on historical scenarios, and LJM’s internal historical scenarios showed losses much greater than 40% for each strategy, according to the complaint.
The complaint also charges LJM with falsely representing to prospective and existing pool participants and others in connection with its options trading strategies that LJM had “robust risk management” that utilized historical scenario analysis when, in fact, LJM did not use historical scenarios in risk management. In addition, LJM failed to disclose in writing that it ignored the impact of vega or volatility risk in risk management and that it failed to comply with its own internal risk policy. The complaint charges that LJM and Parvataneni failed to disclose that the risk profile of LJM’s portfolio had changed, after repeatedly touting to pool participants that LJM maintained a consistent risk profile. The complaint alleges that, by late 2017 through February 2018, LJM had significantly deviated from its historical risk profile, in that the delta had moved from negative to consistently positive, vega decreased, gamma decreased and the portfolio’s vulnerability to loss in certain scenarios more than doubled.
Caine is charged with liability for all of LJM’s misrepresentations as a controlling person who knowingly induced the violations or did not act in good faith. Additionally, both Caine (registered AP of LJM) and LJM (registered CPO) are charged with failing to diligently supervise their employees and agents who, among other things, made certain false and misleading statements and failed to comply with LJM’s risk policy.
CFTC Order Against Ariathurai
The order against Ariathurai, finds that statements of Ariathurai in the Risk FAQ and 2016 DDQ that potential worst-case daily losses from selling options could be limited to 20-40%, depending on the strategy were false and misleading; and that, when speaking to prospective and existing pool participants about LJM’s risk management, he failed to disclose that LJM did not actually implement historical scenarios in risk management. 
The Securities and Exchange Commission (SEC) today also issued an order filing and settling similar charges against Ariathurai, and filed a complaint against LJM, Caine and Parvataneni in federal court.  Per the terms of the CFTC and SEC orders, any payments of the monetary sanctions paid by Ariathurai will be credited by each agency. Moreover, per the terms of the SEC order, a Fair Fund   may be established for the benefit of affected investors.
The CFTC acknowledges and appreciates the cooperation and assistance of the SEC, the National Futures Association (NFA), and the Financial Industry Regulatory Authority (FINRA).
The Division of Enforcement staff members responsible for this action are W. Derek Shakabpa, Patrick Daly, Michael Cazakoff, Elizabeth May, Jordon Grimm, David Acevedo, Lenel Hickson, and Manal Sultan.
CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools.
The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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Washington, D.C. — Commissioner Dawn D. Stump, the temporary sponsor of the Agricultural Advisory Committee (AAC), announced today the AAC will hold a public meeting on Wednesday, June 9, 2021 at 10:00 a.m. (EDT). The meeting will be held via teleconference in accordance with the agency’s implementation of social distancing due to the COVID-19 (coronavirus) pandemic.
The AAC will receive a report from the Subcommittee to Evaluate Commission Policy with Respect to Implementation of Amendments to Enumerated Agricultural Futures Contracts with Open Interest (Ag-OI). The meeting will also include a discussion on global agricultural commodity derivatives contracts and other agricultural risk management issues.
“As people around the globe continue dealing with the devastating effects of the COVID-19 pandemic, food and fiber providers occupy the frontlines of any economic recovery in the U.S. and abroad. Recent events highlight the consumer demand for agricultural products,” Commissioner Stump explained. “However, we all know that risks remain high for those who facilitate a reliable supply of such goods. Producers, processors, food service providers, and specialty equipment manufacturers require access to sound derivatives markets in order to mitigate their risks and perform their critically important function as we cross into the next phase of economic recovery.”
Commissioner Stump became the temporary sponsor of the AAC with the departure of Chairman Heath P. Tarbert.
Members of the public may listen to the meeting via conference call using a domestic toll-free telephone or international toll or toll-free number to connect to a live, listen-only audio feed, or listen to the meeting on cftc.gov. Persons requiring special accommodations because of disabilities to listen to or view the meeting should notify Summer Mersinger, the AAC’s Designated Federal Officer, at 202-418-6074.

What:

Agricultural Advisory Committee Meeting 

Location:

Via Teleconference 

Date:

Wednesday, June 9, 2021 

Time:

10:00 a.m. – 12:00 p.m. EDT

Viewing/Listening Instructions: To listen to the live audio feed, call the toll or toll-free numbers below. Call-in participants should be prepared to provide their first name, last name, and affiliation, if applicable.

Domestic Toll-Free:

877-951-7311

International Numbers:

International Numbers

Conference Passcode:

3514459

There are five active federal advisory committees overseen by the CFTC. These bodies were created to provide the Commission with outside advice and recommendations on a variety of regulatory and market issues that affect the integrity and competitiveness of U.S. markets. These committees facilitate communication between the Commission and market participants, other regulators, and academics. The views, opinions, and information expressed by the advisory committees are solely those of the respective advisory committee and do not necessarily reflect the views of the Commission, its staff, or the U.S. government.

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Washington, D.C. — The Commodity Futures Trading Commission’s Market Participants Division (MPD) today published updated responses to frequently asked questions regarding CFTC Regulation 4.27 and Form CPO-PQR (FAQs). These FAQs update the 2015 FAQs that addressed issues on Form CPO-PQR from filing mechanics and deadlines to more technical questions. [See CFTC Press Release No. 7273-15]  
In October 2020, the CFTC adopted a Final Rule amending Form CPO-PQR and CFTC Regulation 4.27, the provision requiring Form CPO-PQR reporting. [See CFTC Press Release No. 8277-20] The updated FAQs reflect that Final Rule’s revisions and supersede the 2015 version.
MPD staff intends to update the FAQs on an as-needed basis to clarify issues for the broadest set of Form CPO-PQR filers.

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OMAK – In accordance with Centers for Disease Control and Prevention (CDC) and Colville Tribe’s Health Director Guidance, the Colville Tribal Federal Corporation (CTFC), consisting of Colville Gaming LLC, Forest Products, LLC, and the CTFC Administration are open without COVID-19 restrictions, with the exception of the following requirements; 
• Screening: Team members and patrons who have been fully vaccinated, with a valid vaccination card, are exempt from the daily screening requirements. Team members and patrons who have not been fully vaccinated, without a valid vaccination card, must continue with daily screening routines. 
• Mask Mandate: Team members and patrons who have been fully vaccinated, with a valid vaccination card, are exempt from the mask mandate. Team members and patrons who have not been fully vaccinated, without a valid vaccination card, must continue to wear masks at all times while on CTFC facilities. 

• Social Distancing: Team members and patrons who have been fully vaccinated, with a valid vaccination card, are exempt from current social distancing policies. Team members and patrons who have not been fully vaccinated, without a valid vaccination card, must continue to social distance at all times while on CTFC facilities. 
Team members who have symptoms at screening will not be admitted to the facilities and will be referred to contact tracing and COVID-19 testing as previously required. Team members who have been referred for testing will not be allowed to return to work until they are released by their health care provider. 

Team members should contact benefits immediately if symptoms are present to determine if Families First Coronavirus Response Act (FFCRA) leave can be granted. 
Team members should still not report to work sick. 
“Our team members and patrons have been diligent in following the safety standards CTFC has put in place for the last year,” said Kary Nichols, CTFC Chief Executive Officer. “We are confident that we will continue to be the right place for the right time.” 
CTFC appreciates the efforts from team members to get vaccinated, and continues to encourage team members to get vaccinated with their local healthcare providers.

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