April 12, 2011

CFTC Settles Charges against Kuen Cheol Song for Illegal, Fictitious Trading Scheme

Federal court orders Song to pay $615,000 in disgorgement and a civil monetary penalty for non-competitive trading at his employer’s expense.

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained $615,000 in disgorgement and a civil monetary penalty in a federal court consent order against defendant Kuen Cheol Song, who resided in Singapore during the relevant time period, for engaging in an illegal, fictitious trading scheme (see CFTC Press Release 5806-10, April 12, 2010). Song has never been registered with the CFTC.

The consent order, entered on April 11, 2011, 2011, by the Honorable Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York, requires Song to pay $475,000 in disgorgement and a $140,000 civil monetary penalty. The order permanently bans Song from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from registration with the CFTC.

According to the order, Song controlled and traded his personal account and the Woori Absolute Global Opportunity Fund (WAGOF) account of his employer, Singapore-based Woori Absolute Partners. The order finds that, starting on August 28, 2009, Song engaged in a series of natural gas and heating oil futures transactions executed on the New York Mercantile Exchange’s (NYMEX’s) Globex trading platform during which Song “repeatedly, illegally, and self-servingly, traded futures contacts between his personal account and the WAGOF account.” Song also engaged in a similar trading pattern with cotton, corn, soybean and wheat futures, according to the order.

By consistently executing trades between his personal account and the WAGOF account during periods of low volume in order to pass money from the WAGOF account to his personal account, Song entered into transactions without intent to take a genuine, bona fide position in the market, the order finds. In total, Song’s personal account gained approximately $475,000 based on his illegal commodity transactions, while the WAGOF account lost approximately $475,000, according to the order.

The CFTC thanks the CME Group, Inc., the parent of the NYMEX, for its assistance.

The CFTC Division of Enforcement staff members responsible for this matter are Christopher Giglio, Kyong J. Koh, A. Daniel Ullman II, Elizabeth Padgett, Michael Berlowitz, Joseph Rosenberg, Peter M. Haas, Paul G. Hayeck and Joan Manley.

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Last Updated: April 12, 2011