Yesterday Glencore plc settled CFTC violations resulting from one person controlling the trading activities of two subsidiaries. CFTC Docket No. 18-12. https://www.cftc.gov/sites/default/files/2018-04/enfglencoreorder04302018.pdf
Glencore Grain B.V. and Glencore Ltd were subsidiaries of Glencore plc. Both were involved in cotton trading. Both shared a so-called “Head of Cotton.” This person directly supervised cotton traders at one subsidiary and was the direct supervisor of the head cotton trader at another. The Head of Cotton “remained generally apprised of trader activities and positions across Glencore entities and participated in discussions regarding certain trade-level decisions at both Glencore Grain B.V. and Glencore Ltd.” Order at 2
The CFTC found these activities of the Head of Cotton resulted in the two subsidiaries being under common control. As a result the CFTC combined each subsidiary’s cotton futures positions. The combined positions exceeded applicable position limits. Further, because the two subsidiaries were under common control, there were not two independently controlled accounts for purposes of an Exchange for Physicals transaction, thereby resulting in prohibited wash trades.
$2 million fine.
Bob Fallon, Engleman Fallon, PLLC, 202 464-1331