The Commodity Futures Trading Commission has fined two traders a combined $700,000 for engaging in a fraudulent trade allocation scheme involving natural gas futures contracts and has permanently banned them from trading.
The agency imposed a civil penalty of $650,000 on R. Scott Hopkins of Plano, TX, the head of trading for a natural gas delivery company, and ordered Thomas Carroll of Mahwah, NJ, a registered floor broker, to pay a penalty of $50,000. The CFTC did not identify the natural gas delivery company.
The CFTC order said that between approximately January 2006 and 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 be placed in Hopkins' personal account. If the market moved in a direction that made the filled order unprofitable, the two traders transferred the losing trade from Hopkins' personal account to his employer's account, the agency said. Winning trades were kept in Hopkins' personal account.
The CFTC action stemmed from a cooperative enforcement investigation with the New York County District Attorney's Office of abusive trading practices on the New York Mercantile Exchange.
Hopkins pleaded guilty to a state felony crime of forgery in the second degree for which the district attorney's office recommended a sentence of probation, forfeiture of $650,000, a criminal fine of $5,000 and 250 hours of community service. Carroll pleaded guilty to a state misdemeanor crime of criminal facilitation in the fourth degree and was sentenced to a conditional discharge.
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