Articles Tagged with illegal sales washes

Illegal Wash Sales Charges Result in $5M Penalty
The US Commodity Futures Trading Commission recently announced that it has reached a settlement with Rosenthal Collins Capital Markets LLC, now named DV Trading LLC (RCCM), for illegal wash sales that were conducted to create rebates of exchange fees determined by growing trading volumes. As part of the settlement, the trading company will pay a $5M penalty and must cease and desist from the violations charged.

According to the regulator’s order, from early 2013 through July 2015, proprietary traders at Rosenthal Collins Capital Markets took place in multiple wash trading strategies to generate rebates via the Eurodollar Pack and Bundle Market Maker Program. The Chicago Mercantile Exchange offers the program, which allows for rebates as credit fees for meeting certain quoting obligations.

However, according to the order, in early 2013, to make enough rebates, a firm trader was able to circumvent Rosenthal Collins Capital Market’s own wash blocking system so he could trade against himself and earn the rebates separate from actual market conditions. He kept doing this until he was caught. A few months later, said the CFTC, two of the firm’s traders engaged in scratch trading for extended periods, again to earn rebates. This involved buying and selling opposite one another.

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