This document summarizes a conference on energy trading compliance and regulatory enforcement. It provides an outline of topics to be covered, including definitions of market manipulation under FERC and CFTC rules. It also discusses best practices for compliance programs and areas regulators are pursuing, such as uneconomic transactions and exploiting market flaws. Real cases of market manipulation are presented where financial penalties from $650,000 to $470 million were imposed by FERC and CFTC for activities including spoofing, wash trading, and manipulating prices.
It’s bigger. It’s tougher. It’s coming into effect on 3 July 2016. It’s the new Market Abuse Regulation (MAR).
MAR widens greatly the scope of instruments and actions subject to anti-market abuse regulations. It also creates a new regime to govern market soundings, and imposes tough new obligations on regulated firms.
We talked through the MAR journey and discussed how it might affect firms.
Government Investigations and Enforcement ActionsPolsinelli PC
The fifth webinar presentation in the M&A Litigation Series examines compliance pitfalls associated with M&A transactions. We will discuss how to evaluate antitrust risks of a transaction. We also will address compliance concerns – such as antitrust, the Foreign Corrupt Practices Act, the False Claims Act, and export control issues – that could significantly impact the scope, duration, and magnitude of necessary due diligence. Finally, we will address post-merger considerations that could decrease the severity of a compliance concern if one were to arise after a merger or acquisition has been completed.
On our agenda:
-Pre-transaction – evaluating the transaction itself from an antitrust perspective
-Pre-closing – managing client conduct and the risk of “gun jumping”
-Due Diligence – what to look for
-Post-merger considerations for fostering and perpetuating a “Culture of Compliance”
-Managing compliance concerns that are discovered post-closing
Alex Howard and Neil Beaton discussed valuations in dissenter’s rights and oppression actions in a webinar sponsored by the AICPA Business Valuation Web Seminar Series: Core Competencies from the Nation’s Leading Experts.
Luis presented to Brazilian law firm Peixoto e Cury Advogados on April 12, 2012, in Sao Paulo, Brazil. Luis discussed the background of the Foreign Corrupt Practices Act, along with the rules, regulations and sanctions.
The European Banking Authority are proposing to change fundamentally the prudential landscape for investment firms. In this briefing we looked at these proposals for strategic context around the update to your 2016 ICAAP.
It’s bigger. It’s tougher. It’s coming into effect on 3 July 2016. It’s the new Market Abuse Regulation (MAR).
MAR widens greatly the scope of instruments and actions subject to anti-market abuse regulations. It also creates a new regime to govern market soundings, and imposes tough new obligations on regulated firms.
We talked through the MAR journey and discussed how it might affect firms.
Government Investigations and Enforcement ActionsPolsinelli PC
The fifth webinar presentation in the M&A Litigation Series examines compliance pitfalls associated with M&A transactions. We will discuss how to evaluate antitrust risks of a transaction. We also will address compliance concerns – such as antitrust, the Foreign Corrupt Practices Act, the False Claims Act, and export control issues – that could significantly impact the scope, duration, and magnitude of necessary due diligence. Finally, we will address post-merger considerations that could decrease the severity of a compliance concern if one were to arise after a merger or acquisition has been completed.
On our agenda:
-Pre-transaction – evaluating the transaction itself from an antitrust perspective
-Pre-closing – managing client conduct and the risk of “gun jumping”
-Due Diligence – what to look for
-Post-merger considerations for fostering and perpetuating a “Culture of Compliance”
-Managing compliance concerns that are discovered post-closing
Alex Howard and Neil Beaton discussed valuations in dissenter’s rights and oppression actions in a webinar sponsored by the AICPA Business Valuation Web Seminar Series: Core Competencies from the Nation’s Leading Experts.
Luis presented to Brazilian law firm Peixoto e Cury Advogados on April 12, 2012, in Sao Paulo, Brazil. Luis discussed the background of the Foreign Corrupt Practices Act, along with the rules, regulations and sanctions.
The European Banking Authority are proposing to change fundamentally the prudential landscape for investment firms. In this briefing we looked at these proposals for strategic context around the update to your 2016 ICAAP.
The Relationship Between Insurance Companies and Outside Counsel Rachel Hamilton
Now, more than ever, attorneys and law firms must take action to ensure that they are protected from former disgruntled clients and third parties looking to recoup losses and/or share blame by bringing malpractice claims against attorneys.
Mortgage Servicing Transfers: Meeting the Operational and Regulatory DemandsRachel Hamilton
ACI) 3rd Bank and Non-Bank Forum on MORTGAGE SERVICING COMPLIANCE will keep you one step ahead of the new regulatory scrutiny and unparalleled networking opportunities. This conference will provide attendees with the latest insights and expert advice from our exceptional faculty.
In these slides we discuss that how to trade a energy which is generated from renewable resources and how to manage that energy
Regards: Dr Muhammad Naeem
Assistant Professor CIIT WAH Cantt
Distributed Antenna Systems and Compact Base Stations: When to Use Which?Frank Rayal
Distributed Antenna Systems grew from the need to provide wireless coverage and capacity to areas of highly concentrated users. More recently, as capacity and coverage demands expanded and some municipalities passed strict edicts against constructing towers, DAS systems got deployed along streets to provide service in the urban and suburban outdoors. Another solution to add capacity and coverage uses compact base stations which are getting large attention from both a cost and performance perspective. From a deployment perspective, they provide similar network architecture to DAS, which raises the question on how these two solutions compare. This application note will highlight the areas where each solution makes economic and technical sense.
Financial Algorithms presents the energy trading scenario for the year 2016. In this presentation, after examining various fundamental factors in energy sector, FA forecasts the crude oil price, gasoline & natural gas price levels for the year 2016; in case of mean volatility levels and high volatility levels, both. FA also focuses on how to model price levels and volatility surfaces in low volatility and high volatility scenarios under forward & forward-forward models using various energy contracts and spreads i.e. crack spread. Various greek sensitivities including second order & third order greeks, which can be helpful in projecting the price & volatility levels, are also described. At the end, correlation factors, fundamental & technical both, are discussed. These correlation factors are exogenous in price forecasting, and new emerging trends which can affect the energy trading in a long run also been discussed.
WG Consulting held an early morning breakfast seminar at the Houston Junior League to discuss the Dodd-Frank Compliance landscape as it currently stands as is expected to shape out--and how that effects energy businesses of all sizes today.
Presentation to Ukraine Commodity Market Development Conference
The author of the presentation: Christa Lachenmayr, Division of Market Oversight, CFTC (US)
The Relationship Between Insurance Companies and Outside Counsel Rachel Hamilton
Now, more than ever, attorneys and law firms must take action to ensure that they are protected from former disgruntled clients and third parties looking to recoup losses and/or share blame by bringing malpractice claims against attorneys.
Mortgage Servicing Transfers: Meeting the Operational and Regulatory DemandsRachel Hamilton
ACI) 3rd Bank and Non-Bank Forum on MORTGAGE SERVICING COMPLIANCE will keep you one step ahead of the new regulatory scrutiny and unparalleled networking opportunities. This conference will provide attendees with the latest insights and expert advice from our exceptional faculty.
In these slides we discuss that how to trade a energy which is generated from renewable resources and how to manage that energy
Regards: Dr Muhammad Naeem
Assistant Professor CIIT WAH Cantt
Distributed Antenna Systems and Compact Base Stations: When to Use Which?Frank Rayal
Distributed Antenna Systems grew from the need to provide wireless coverage and capacity to areas of highly concentrated users. More recently, as capacity and coverage demands expanded and some municipalities passed strict edicts against constructing towers, DAS systems got deployed along streets to provide service in the urban and suburban outdoors. Another solution to add capacity and coverage uses compact base stations which are getting large attention from both a cost and performance perspective. From a deployment perspective, they provide similar network architecture to DAS, which raises the question on how these two solutions compare. This application note will highlight the areas where each solution makes economic and technical sense.
Financial Algorithms presents the energy trading scenario for the year 2016. In this presentation, after examining various fundamental factors in energy sector, FA forecasts the crude oil price, gasoline & natural gas price levels for the year 2016; in case of mean volatility levels and high volatility levels, both. FA also focuses on how to model price levels and volatility surfaces in low volatility and high volatility scenarios under forward & forward-forward models using various energy contracts and spreads i.e. crack spread. Various greek sensitivities including second order & third order greeks, which can be helpful in projecting the price & volatility levels, are also described. At the end, correlation factors, fundamental & technical both, are discussed. These correlation factors are exogenous in price forecasting, and new emerging trends which can affect the energy trading in a long run also been discussed.
WG Consulting held an early morning breakfast seminar at the Houston Junior League to discuss the Dodd-Frank Compliance landscape as it currently stands as is expected to shape out--and how that effects energy businesses of all sizes today.
Presentation to Ukraine Commodity Market Development Conference
The author of the presentation: Christa Lachenmayr, Division of Market Oversight, CFTC (US)
Current Status of the Stock Market in Sri Lanka, IOSCO Principals of Securities Regulation, Self Regulation in Securities Markets, Importance of Market Integrity & Ethics and how the proposed new SEC Act will help regain Investor trust & confidence
AIMA Hedge Fund Manager Training, 13th April 2016. Hosted by Mike Booth and Andrew Henderson this session was focused towards portfolio managers, dealers and compliance teams. We had 70+ hedge fund managers register and we covered topics including:
• The FCA’s rules applicable for front office controls
• The lessons that can be learned from the recent front office controls fines
• The respective roles of compliance and front office teams
• What firms are doing in practice
• A brief overview of the new MAD II / MiFID II rules in the context of front office controls
FinfraG: Opportunities & Challenges for Global Trading PlatformsCognizant
The Swiss Financial Market Infrastructure Act (FMIA), commonly known by its German name, FinfraG, spells out regulations for global derivative trading platforms and central clearing parties, including reporting, clearing, platform trading and risk mitigation. The act also incorporates laws pertaining to insider information/market abuse and shareholdings/public offers.
Procurement & Government Contracting Compliance (Series: Corporate & Regulato...Financial Poise
The United States government is one of the largest purchaser of goods and services in the world. The volume and complexity of transactions related to procurement are some of the reasons that transactions with the government are most vulnerable to corruption. State and federal regulatory compliance can be tough to navigate and the process can make even routine sales and marketing practices vulnerable to civil and criminal liability. This webinar analyzes the regulatory framework, including identification of some of the legal risks in solicitations, pre- and post-award bid protests, contract compliance, change orders, and contract claims and disputes. The webinar also discusses defense strategies of a company that is accused of fraud or civil non-compliance. The panel will also examine how the pandemic has increased activity in certain sectors and how the volume, speed, and emergent conditions have presented new challenges in terms of compliance in government contracts.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/procurement-government-contracting-compliance-2021/
Procurement & Government Contracting Compliance (Series: Corporate & Regulato...Financial Poise
The volume and complexity of transactions related to procurement are some of the reasons that transactions with the government are most vulnerable to corruption. State and federal regulatory compliance can be tough to navigate and the process can make even routine sales and marketing practices vulnerable to civil and criminal liability. This webinar analyzes the regulatory framework, including identification of some of the legal risks in solicitations, pre- and post-award bid protests, contract compliance, change orders, and contract claims and disputes. The webinar also discusses defense strategies of a company that is accused of fraud or civil non-compliance.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/procurement-government-contracting-compliance-2020/
Similar to Latest Developments in Market Manipulation (20)
The International Digital and Virtual Currency LandscapeRachel Hamilton
Building on the incredible success of the June 2014 conference, and in response to demand from the market, American Conference Institute has developed its second forum on Virtual & Digital Currency and Payment Systems. This program will bring together an unparalleled faculty of in-house counsel and compliance professionals, senior executives from industry-leading companies, high-level regulatory and enforcement officials, and top outside counsel specializing in virtual and digital currencies who will provide you with the insights and tools necessary to navigate the legal, compliance, technical, and business hurdles arising from these new technologies.
Current Good Manufacturing Practices: Drug and Biologics Rachel Hamilton
ACI’s FDA Boot Camp has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of core FDA competencies.
Ethical Considerations for Paragraph IV Matters Before the PTO and District C...Rachel Hamilton
The Advanced Forum for Brand Name and Generic Counsel on the Intricacies of Extreme Hatch-Waxman Litigation. *Pre-suit Considerations * Commencement of Suit * Discovery *Motion Practice* Final Adjudication
The Devil is in the Details: Best Practices for Handling the Gray Areas in Re...Rachel Hamilton
With a focus on benchmarking and improving existing compliance programs as well as preparing for the fallout once the reports are public, this is a solutions-driven event. Attendees at all phases of aggregate spend implementation will leave this conference with practical tips and real-world tested solutions to better manage the increasingly complex and often unclear reporting requirements. Throughout the event, our expert faculty will provide guidance and solutions for improving compliance protocols to minimize future problems and ensure that you are able to certify with confidence going forward.
NEW CLAIMS TRENDS RELATED TO THE U.S. PAIN CRISISRachel Hamilton
ACI's Medical Professional Liability Insurance Forum is the premier event on benchmarking coverage, underwriting, and claims strategies. No other event can match the practical and detailed analysis of the entire MPL Insurance landscape, including the impact of litigation, regulatory action, and market conditions in today's tumultuous environment.
Recent Rulings and Trends in Decision Making Impacting AllocationRachel Hamilton
ACI is pleased to introduce its Insurance Allocation Summit - the only Allocation Conference that goes the extra mile and brings you the highest level judicial insights and maximum networking opportunities with in-house industry experts.
ACI's 20th National Conference on Consumer Finance Class Actions & Litigation with expert defense strategies for in-house and outside counsel on navigating class actions, litigation, and government enforcement actions in the consumer finance industry.
Revisiting the Four Pillars Supporting an Effective BSA/AML Compliance ProgramRachel Hamilton
ACI's 10th National Forum on Prepaid Card Compliance will bring together an unparalleled faculty of regulatory and enforcement officials, compliance experts from industry leaders, and outside counsel specializing in prepaid card regulatory compliance who will provide you with best practices and targeted guidance.
ACI’s lauded Cyber & Data Risk Insurance conference is the highest-level event that provides maximum opportunities to learn from and network with underwriters, brokers, claims managers and industry leaders, and helps you keep pace with the ever-changing cyber insurance market. It’s also the only conference that brings you regulatory and enforcement priorities straight from the federal and state government themselves.
Class Actions Trends - An Overview of Recent Trends Involving Class Actions Rachel Hamilton
This event has been tailored to provide attendees with the insights and strategies that are needed to ensure compliance with the new rules, defend against new and emerging claims, and adapt to the evolving regulatory landscape. Our unparalleled faculty of key regulatory and enforcement officials, federal and state judges, senior in-house counsel, and leading outside counsel will provide you with strategic advice, critical insights, and comprehensive updates.
Remittance Transfer Rule: Depository Institution Exemption Rachel Hamilton
ACI's has developed the 8th National Forum on Balancing Innovation with Consumer Protections in Emerging Payment Systems Forum that will bring together an unparalleled faculty of in-house counsel and compliance professionals, senior executives from industry-leading companies, high-level regulatory and enforcement officials, and top outside counsel specializing in emerging payment systems who will provide you with the insights and tools necessary to navigate the legal, compliance, technical, and business hurdles arising from new payment products and technologies.
Meet Joyce Edelman, a Speaker at ACI’s 19th Annual Drug and Medical Device Li...Rachel Hamilton
For the past 18 years, leading drug and medical device lawyers have gathered in New York to network with their peers, and craft strategies to surmount new litigation challenges. Now in its 19th year, ACI’S DRUG AND MEDICAL DEVICE LITIGATION is widely regarded as the year’s premier products liability forum.
Epcon is One of the World's leading Manufacturing Companies.EpconLP
Epcon is One of the World's leading Manufacturing Companies. With over 4000 installations worldwide, EPCON has been pioneering new techniques since 1977 that have become industry standards now. Founded in 1977, Epcon has grown from a one-man operation to a global leader in developing and manufacturing innovative air pollution control technology and industrial heating equipment.
Microbial characterisation and identification, and potability of River Kuywa ...Open Access Research Paper
Water contamination is one of the major causes of water borne diseases worldwide. In Kenya, approximately 43% of people lack access to potable water due to human contamination. River Kuywa water is currently experiencing contamination due to human activities. Its water is widely used for domestic, agricultural, industrial and recreational purposes. This study aimed at characterizing bacteria and fungi in river Kuywa water. Water samples were randomly collected from four sites of the river: site A (Matisi), site B (Ngwelo), site C (Nzoia water pump) and site D (Chalicha), during the dry season (January-March 2018) and wet season (April-July 2018) and were transported to Maseno University Microbiology and plant pathology laboratory for analysis. The characterization and identification of bacteria and fungi were carried out using standard microbiological techniques. Nine bacterial genera and three fungi were identified from Kuywa river water. Clostridium spp., Staphylococcus spp., Enterobacter spp., Streptococcus spp., E. coli, Klebsiella spp., Shigella spp., Proteus spp. and Salmonella spp. Fungi were Fusarium oxysporum, Aspergillus flavus complex and Penicillium species. Wet season recorded highest bacterial and fungal counts (6.61-7.66 and 3.83-6.75cfu/ml) respectively. The results indicated that the river Kuywa water is polluted and therefore unsafe for human consumption before treatment. It is therefore recommended that the communities to ensure that they boil water especially for drinking.
WRI’s brand new “Food Service Playbook for Promoting Sustainable Food Choices” gives food service operators the very latest strategies for creating dining environments that empower consumers to choose sustainable, plant-rich dishes. This research builds off our first guide for food service, now with industry experience and insights from nearly 350 academic trials.
Climate Change All over the World .pptxsairaanwer024
Climate change refers to significant and lasting changes in the average weather patterns over periods ranging from decades to millions of years. It encompasses both global warming driven by human emissions of greenhouse gases and the resulting large-scale shifts in weather patterns. While climate change is a natural phenomenon, human activities, particularly since the Industrial Revolution, have accelerated its pace and intensity
"Understanding the Carbon Cycle: Processes, Human Impacts, and Strategies for...MMariSelvam4
The carbon cycle is a critical component of Earth's environmental system, governing the movement and transformation of carbon through various reservoirs, including the atmosphere, oceans, soil, and living organisms. This complex cycle involves several key processes such as photosynthesis, respiration, decomposition, and carbon sequestration, each contributing to the regulation of carbon levels on the planet.
Human activities, particularly fossil fuel combustion and deforestation, have significantly altered the natural carbon cycle, leading to increased atmospheric carbon dioxide concentrations and driving climate change. Understanding the intricacies of the carbon cycle is essential for assessing the impacts of these changes and developing effective mitigation strategies.
By studying the carbon cycle, scientists can identify carbon sources and sinks, measure carbon fluxes, and predict future trends. This knowledge is crucial for crafting policies aimed at reducing carbon emissions, enhancing carbon storage, and promoting sustainable practices. The carbon cycle's interplay with climate systems, ecosystems, and human activities underscores its importance in maintaining a stable and healthy planet.
In-depth exploration of the carbon cycle reveals the delicate balance required to sustain life and the urgent need to address anthropogenic influences. Through research, education, and policy, we can work towards restoring equilibrium in the carbon cycle and ensuring a sustainable future for generations to come.
ENVIRONMENT~ Renewable Energy Sources and their future prospects.tiwarimanvi3129
This presentation is for us to know that how our Environment need Attention for protection of our natural resources which are depleted day by day that's why we need to take time and shift our attention to renewable energy sources instead of non-renewable sources which are better and Eco-friendly for our environment. these renewable energy sources are so helpful for our planet and for every living organism which depends on environment.
Top 8 Strategies for Effective Sustainable Waste Management.pdfJhon Wick
Discover top strategies for effective sustainable waste management, including product removal and product destruction. Learn how to reduce, reuse, recycle, compost, implement waste segregation, and explore innovative technologies for a greener future.
1. #EnergyTrading
ACI’s 10th National Forum on Energy Trading Compliance & Regulatory Enforcement
Jerry Jeske
Group Chief Compliance Officer
Mercuria Energy Trading
Latest Developments in Market Manipulation Responding to Regulatory Inquiries, What Does (and Does Not) Currently Constitute Market Manipulation, and Best Practices in Shaping a Robust Compliance Program to Avoid Government Scrutiny
Alexandra Guest
Chief Compliance Officer for FCM
Barclays Capital
Vincenzo Franco
Assistant General Counsel – Wholesale Trading Compliance
Exelon Business Services Co., LLC
November 20th – 21st, 2014
Demetrios G. Pulas
Senior Counsel
Husch Blackwell LLP
Daniel A. Mullen
Partner
Fried, Frank, Harris, Shriver & Jacobson LLP
David M. Perlman
Partner
Bracewell & Giuliani LLP
Tweeting about this conference?
Robert S. Fleishman (Moderator)
Senior Of Counsel
Morrison & Foerster LLP
Jeff Lam
Chief Compliance Officer
Powerex Corp.
4. #EnergyTrading
Relevant FERC Rules
The Anti-Manipulation Rule: shall be unlawful for any entity, directly or indirectly, in connection with the purchase or sale of natural gas/electric energy or the purchase or sale of natural gas transportation/electric transmission services subject to the jurisdiction of the Commission,
1)To use or employ any device, scheme, or artifice to defraud,
2)To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
3)To engage in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any entity.
5. #EnergyTrading
Relevant FERC Rules (cont’d)
The “Market Behavior” Rules – Sections 35.41 and 284.403 – key elements:
•Comply with the rules of organized electric markets
•Provide accurate/factual information to FERC/RTO/ISO, or other Transmission Operators; do not submit false/misleading information or omit material information
•Strict liability vs. exercise due diligence defense
•Report accurately (if at all) to price reporting indices (applies to electric and gas sellers)
Attempted manipulation?
6. #EnergyTrading
CFTC – Dodd-Frank 10b5-Manipulation: Rule 180.1 for Fraud
Like FERC (and FTC):
•A person acting intentionally or recklessly
•In connection with (per CFTC, read broadly)
•Any swap (including options), cash commodity contract or futures contract
•Artificial price not required
•Traditional price manipulation (and attempt) authority still exists
7. #EnergyTrading
CFTC Rule 180.1 (cont’d)
Including:
•Using or attempting to use any device or scheme to defraud
•Making or attempting to make any untrue or misleading statement of a material fact
•Engaging or attempting to engage in any act that would operate as a fraud or deceit
•Delivering or attempting to deliver by any means of communication a false, misleading, or inaccurate report that bears on the price of any commodity
8. #EnergyTrading
CFTC Rule 180.1 (cont’d)
Fraud under Rule 180.1 includes:
•False reporting to Price Reporting Agencies for benchmarks
•False statements to Government, Exchanges, SROs and SDRs
•Lying to influence prices in particular direction to benefit position
9. #EnergyTrading
CFTC –Disruptive Trade Practices Generally
•Pre-Dodd-Frank Sec. 4c(a)(1)-(2) still exist:
•Wash sales
•Accommodation trades
•Fictitious sales
•Causing price that is “not . . . true and bona fide”
•CFTC Rule 1.38: Exchange trades must be executed “openly and competitively”
•Dodd-Frank Authorities Do Not Apply to:
•Block futures transactions
•Forward transactions between commercial market participants
10. #EnergyTrading
CFTC – Dodd Frank - Disruptive Trade Practices Sec. 4c(a)(5)(A)
Violating bids and offers applicable to execution venues, including SEF order book (i.e., no best execution requirement between venues)
•If party buys higher than prevailing offer or sells lower than prevailing bid, party will be per se liable and CFTC will not have to prove intent.
•Does not apply to:
•Buying or selling the board
•Order-matching algorithms
11. #EnergyTrading
CFTC – DF Disruptive Trade Practices Sec. 4c(a)(5)(B)
Disregard for orderly execution of transactions during closing period (banging the close)
•Any intentional or reckless activity (bids, offers and executions) that may “disrupt the orderliness of the market”
•Includes pre-closing activity: Accumulating sizable position leading up to close then large liquidation
12. #EnergyTrading
CFTC – DF Disruptive Trade Practices Sec. 4c(a)(5)(C)
Spoofing
•Bidding or offering with the intent (beyond recklessness) to cancel the bid or offer prior to execution on an Exchange, including to:
•Overload quotation system
•Delay another person’s execution of trades
•Create false appearance of market depth
•Create artificial price movements up or down
13. #EnergyTrading
CFTC – DF Disruptive Trade Practices Sec. 4c(a)(5)(C) (cont’d)
•A party’s pattern of activity will come under question if he/she has an audit trail history of repetitive order cancellations over time.
•Pre-market activity is also subject to ban on spoofing.
•Does not apply to partial fills, RFQs and authorized pre-trade communications.
14. #EnergyTrading
Role of Exchanges in Manipulation Cases
•CEA requires exchanges (DCMs) to establish and enforce compliance with rules, including rules prohibiting abusive trading practices, such as manipulation
•Exchanges have own Surveillance Staff to detect rule violations and Enforcement Staff that prosecute violations
•Violators may include not just members of the exchange, but also market participants who trade on the exchange by or through members
•Exchanges may impose fines as well as trading prohibitions; alternatively, they may refer cases to CFTC Enforcement
•Cases are heard by business conduct committees, who issue decisions that may be appealed to the CFTC
15. #EnergyTrading
CME Disruptive Trading Practices Rule and FAQs
•On August 29, 2014, CME issued a new rule (CME Rule 575) prohibiting certain disruptive trading practices, as well as 22 FAQs regarding prohibited and non-prohibited conduct
•CME rule builds on the new disruptive trading practices in Dodd-Frank and became effective September 15, 2014
•The new rule does not prohibit disruptive conduct for the first time because disruptive practices in the rule have previously been considered by CME as violations of “just and equitable principles of trade”
16. #EnergyTrading
CME Disruptive Trading Practices Rule and FAQs (cont’d)
•Specifically, CME Rule 575 makes it unlawful to enter or cause to be entered:
•An order with the intent, at the time of order entry, to cancel the order before execution or to modify the order to avoid execution;
•An actionable or non-actionable message or messages with intent to mislead other market participants, or to overload, delay, or disrupt the systems of the Exchange or other market participants; and
•An actionable or non-actionable message with intent to disrupt, or with reckless disregard for the adverse impact on, the orderly conduct of trading or the fair execution of transactions.
17. #EnergyTrading
What Regulatory Enforcers Are Pursuing
Areas of Recent FERC Attention:
•Transactions that, standing alone, appear to lack an economic purpose or a legitimate business purpose such as:
•Suffering sustained (seemingly irrational) losses
•Attempting to buy high and sell low;
•Ignoring competitive market feedback for discrete periods of time;
•False or misleading statements to federal and state officials concerning transactions, strategies, or market conditions;
•Trading in price setting mechanisms while holding benefiting positions (such as trading in physical and financial markets and/or products in a manner designed to affect prices or otherwise benefit positions held in another market/product);
18. #EnergyTrading
What Regulatory Enforcers Are Pursuing (cont’d)
•Exploiting or “gaming” market flaws
•Trading during acute market conditions arising from summer peak demand times or extreme weather (such as hurricanes and storms);
•Transactions involving unusually high volumes, high market concentrations, or non-market prices;
•“Banging the close” or “banging/framing the market open” of a settling index product
19. #EnergyTrading
What Regulatory Enforcers Are Pursuing (cont’d)
•Trading to affect the formation of an index price
•Unusual trading patterns or sudden reversal of positions;
•Trading that violates internal risk limits;
•Engaging in transactions that are wash trades or have a wash trading character.
20. #EnergyTrading
Real Cases, Real Sanctions - FERC
•ETP – Selling NG on ICE to depress HSC prices in Platts Index; $40 million (FERC and CFTC).
•Amaranth/Hunter – Selling NG futures on NYMEX to enhance value of opposing swap (FERC and CFTC)
•Amaranth settled with FERC in 2009 for $7.5 million
•In 2011, FERC ordered Hunter to pay $30 million civil penalty. Hunter challenged penalty and D.C. Circuit held in 2013 that FERC lacked authority to impose penalty for futures trading because CFTC had exclusive jurisdiction.
•CFTC settled with Hunter for $750,000 on September 15, 2014.
•Constellation – Arranging virtual and DA deals in ISOs to benefit CFDs; $235 million and trading bans (FERC).
21. #EnergyTrading
Real Cases, Real Sanctions - FERC (cont’d)
•Deutsche Bank – Trading in physical exports in CAISO market with the intent to benefit its CRR position; submitting inaccurate information to FERC by designating physical trades as Wheeling-Through transactions; $1.6 million (FERC).
•BP America – Trading physical natural gas at HSC to increase the value of BP’s financial position; Order to Show Cause issued Aug. 5, 2013; Order setting case for hearing before ALJ and denying motion to dismiss issued on May 15, 2014; Extensive OE testimony filed; ALJ decision expected in August 2015 (FERC).
•Louis Dreyfus Energy Services – Uneconomic virtual trading to benefit FTR position in MISO; $7.8 million (FERC).
22. #EnergyTrading
Real Cases, Real Sanctions - FERC (cont’d)
•JP Morgan Ventures Energy Corp. – Creating artificial market conditions in CAISO through manipulative bidding strategies; $410 million (FERC).
•Powhatan Energy Fund, LLC / City Power Marketing, LLC – Alleged offsetting Up To Congestion trades designed to appear as spread trades to capture marginal loss surplus payments in PJM; Powhatan publicly fighting allegations; NAV stage (FERC).
•Oceanside Power, LLC and a trader settled similar manipulation allegations on Feb. 1, 2013; $51,000 civil penalty and $29,563 disgorgement for company; 1-year trading ban for trader.
•Exelon (formerly Constellation Energy Commodities Group) – Failing to provide California’s grid operator with accurate information; $650,000 (FERC).
23. #EnergyTrading
Real Cases, Real Sanctions - FERC (cont’d)
•Barclays Bank – Manipulating index price in California electricity markets; $470 million, plus $1-15 million for individual traders (FERC).
•For the first time since EPAct 2005 was enacted, FERC filed a civil action asking for a federal court to affirm its decision
•Key issues: FERC’s jurisdiction over products that do not result in physical delivery of electricity; FERC’s ability to prosecute individuals; “open-market” manipulation; and nature of de novo review of FERC orders
24. #EnergyTrading
Real Cases, Real Sanctions - FERC (cont’d)
•Lincoln Paper and Competitive Energy Servs./ Rumford Paper – Defrauding ISO-NE by inflating customer baseline in order to be paid for demand response that it did not provide; $5.4 million (Lincoln); $7.6 Million (CES).
•Pending in federal district court in Massachusetts
•Unclear what effect, if any, D.C. Circuit’s vacating Order No. 745 will have on case
25. #EnergyTrading
Real Cases, Real Sanctions - FERC (cont’d)
Pursuit of Individuals:
•Brian Hunter
•Barclays’ traders
•Richard Silkman
•Moussa Khourama
•Chen, Tsingas, Scavo (Up To Congestion)
•Others
26. #EnergyTrading
What Regulatory Enforcers Are Pursuing
Areas of Recent CFTC Attention:
•Manipulation and false reporting relating to benchmarks – LIBOR
•Manipulation by recklessness – JP Morgan (London Whale)
•Manipulation in one market to benefit other positions – Amaranth/Hunter, Optiver, Parnon Energy
•Disruptive trade practices – Panther Energy, Gelber and Lorenzen, Moore Capital Mgmt., Moncada
•False statements – Stroop, Altamont, Oblensky, Nunn, Butterfield, Optiver
•Liability of senior management – MF Global
27. #EnergyTrading
Real Cases, Real Sanctions – CFTC
•LIBOR – Manipulation and false reporting relating to global benchmark interest rates by Barclays, UBS, RBS, ICAP, Rabobank; $1.8 billion and detailed compliance requirements; RP Martin Holdings (Yen LIBOR).
•JP Morgan – Manipulation under Dodd-Frank by recklessly selling “staggering” volume of credit default swaps in a concentrated period to “defend the position”; $100 million and compliance requirements.
•Amaranth/Hunter – Attempted manipulation of natural gas futures prices; $7.5 million (Amaranth); $750,000 and permanent trading ban (Hunter).
28. #EnergyTrading
Real Cases, Real Sanctions – CFTC
•Optiver – Pre-Dodd-Frank banging the close in opposite direction of large positions in TAS contracts in crude oil, heating oil and gasoline; false statements to NYMEX; $14 million, compliance requirements and trading bans.
•Parnon Energy – Manipulation of WTI at Cushing to profit on parallel derivatives trades; $13 million, trading limitations, and compliance measures.
29. #EnergyTrading
Real Cases, Real Sanctions – CFTC
•Panther Energy Trading – Spoofing under Dodd-Frank by using computer algorithm to place and quickly cancel large bids and offers in futures on Globex to give impression of significant trading interest; $2.8 million and trading ban.
•Chicago USAO charged principal trader, Michael Coscia, with 12 combined counts of criminal commodities fraud and spoofing.
•Each fraud count carries a maximum sentence of 25 years in prison and a $250,000 fine, and each spoofing count carries a maximum penalty of 10 years in prison and a $1 million fine.
•Indictment marks first federal prosecution nationwide under the anti-spoofing provision added to the CEA by Dodd-Frank.
30. #EnergyTrading
Real Cases, Real Sanctions – CFTC
•Gelber and Lorenzen – Pre-Dodd-Frank spoofing by proprietary trading firm that caused non-bona fide prices by reporting orders during pre-open session with no intention of execution; firm and trader engaged in wash sales; $1 million.
•Moncada – Pre-Dodd-Frank spoofing in wheat futures, fictitious sales, and non-competitive transactions; $1.56 million and trading restrictions.
•Moore Capital Mgmt. – Pre-Dodd-Frank banging the close in NYMEX platinum and palladium futures to exert upward pressure on settlement price; $25 million, compliance requirements, registration and trading restrictions.
31. #EnergyTrading
Real Cases, Real Sanctions – CFTC
•False statements to CFTC and SROs
•Stroop: $250,000 penalty against principal for alleged false and misleading financial statement supplied to the CFTC during investigation (March 2014).
•Altamont: $3.6 million penalty for pool fraud, misappropriation, and false statements to the National Futures Association (D. Fla. February 2014).
•Oblensky: $250,000 penalty against bank president for alleged false statements to CFTC (January 2014).
•Nunn: Order imposing trading ban and $600,000 fine for alleged false statements and material omission in statements to ICE (S.D.N.Y. December 2013).
•Butterfield: $50,000 penalty against administrative employee of floor broker for alleged false and misleading statements in investigatory testimony (September 2013).
32. #EnergyTrading
Some Recent Charges - CFTC
•MF Global
•CFTC v. MF Global Inc., No. 13 Civ. 4463 (S.D.N.Y. filed June 27, 2013) – Controlling person liability charged against former CEO Jon S. Corzine.
•CEA section 13(b): Controlling person liable for underlying violation if: i) did not act in good faith; or ii) knowingly induced the violative acts; if registrant, also liable for failure to diligently supervise.
33. #EnergyTrading
Best Practices
•Building on lessons learned from recent enforcement actions and agency priorities, what are some market manipulation-related best practices?
34. #EnergyTrading
Working with Senior Management and Related Issues
•How do you best work with Senior Management to understand the implications of a market manipulation enforcement action?
•How do you effectively maintain productivity and morale during an enforcement investigation and minimize disruption to the business enterprise?
•How do you effectively manage the reputational consequences?
35. #EnergyTrading
Working with Senior Management and Related Issues (cont’d)
•If the company firmly believes its current business practices are acceptable but understands there is risk that the regulator investigating the firm disagrees, how should the company approach the continued use of that business practice?
•How can trader compensation structures best incent compliant behavior?
36. #EnergyTrading
Self-Reporting and Whistleblowers
•Generally, under what circumstances is self- reporting appropriate?
•When may self-reporting not be appropriate with respect to market manipulation?
•How do the CFTC’s whistleblower provisions change things?
37. #EnergyTrading
Surveillance and Documentation
•Can proper surveillance and documentation mitigate civil penalties in the event of wrongdoing?
•How do you develop data filters regarding “related positions” to avoid false flags that are just identifying clearly benign behavior?
•What are some best practices for monitoring and reviewing trader communications?
•To what extent does the most effective trading surveillance system impede business, and what is the proper balance between effectiveness and cost/disruption?
38. #EnergyTrading
Surveillance and Documentation (cont’d)
•How can you properly document trading activity, and what is the wisdom of a sampling or audit approach?
•What other steps can an organization take to monitor and detect transactional activity that may raise red flags with regulators and enforcers?
39. #EnergyTrading
Working with Staff, Market Monitors, and Market Operators Prior to FERC Investigations/CFTC Special Calls
•How can you best respond to initial inquiries or requests?
•How can you best navigate the market monitor referral process (FERC)?
•How can you best respond to special calls?
40. #EnergyTrading
Compliance and Penalties
•How can you get traders/supervisors to also “own” compliance?
•How can an effective compliance program help avoid civil and criminal penalties?
•What is the real value of routine training, self- checks, and internal audits if trouble arises?
41. #EnergyTrading
Compliance Programs
•What is a “culture of compliance” and what is the value proposition of efforts to enhance your organization’s compliance culture?
•How do you convince management to devote appropriate resources to a compliance program?
•How does an organization balance avoiding regulatory scrutiny with legitimate profit-seeking activities?
42. #EnergyTrading
Questions?
Jerry Jeske
Group Chief Compliance Officer
Mercuria Energy Trading
Alexandra Guest
Chief Compliance Officer for FCM
Barclays Capital
Vincenzo Franco
Assistant General Counsel – Wholesale Trading Compliance
Exelon Business Services Co., LLC
Demetrios G. Pulas
Senior Counsel
Husch Blackwell LLP
Daniel A. Mullen
Partner
Fried, Frank, Harris, Shriver & Jacobson LLP
David M. Perlman
Partner
Bracewell & Giuliani LLP
Robert S. Fleishman (Moderator)
Senior Of Counsel
Morrison & Foerster LLP
Jeff Lam
Chief Compliance Officer
Powerex Corp.