September 25, 2014

CFTC Orders Absa Bank, Ltd. to Pay $150,000 Civil Monetary Penalty for Unlawfully Executing Prearranged, Noncompetitive Trades on the CBOT

Absa Bank and previously sanctioned FirstRand Bank, Ltd. prearranged noncompetitive corn and soybean futures trades

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against financial services company Absa Bank, Ltd. (Absa), headquartered in Johannesburg, South Africa, for executing prearranged, noncompetitive trades involving corn and soybean futures contracts on the Chicago Board of Trade (CBOT) with FirstRand Bank, Ltd. (FirstRand), also headquartered in Johannesburg, South Africa. The CFTC previously sanctioned FirstRand for its role in these unlawful trades (see CFTC Press Release and Order 6985-14, August 27, 2014).

The CFTC Order requires Absa to pay a $150,000 civil monetary penalty as a result of its unlawful conduct. The Order also requires Absa to comply with certain undertakings, including instituting, updating, and/or strengthening policies and procedures designed to detect, deter, discipline, and correct any potential prearranged, fictitious, or noncompetitive trading in violation of the Commodity Exchange Act (CEA) and CFTC Regulations with regard to transactions made by Absa on U.S. markets. Finally, the Order requires Absa to cease and desist from further violations of Section 4c(a)(1) of the CEA and CFTC Regulation 1.38(a), as charged.

The CFTC Order finds that on several occasions, from June 2009 to August 2011, Absa and FirstRand prearranged noncompetitive trades involving CBOT corn and soybean futures contracts. Before these trades were entered on the CBOT, employees for Absa and FirstRand had telephonic conferences with each other during which they agreed upon the contract, quantity, price, direction, and timing of those trades. These prearranged trades negated market risk and price competition and constituted fictitious sales, in violation of the CEA. Further, by entering into prearranged trades for corn and soybean futures contracts, Absa also engaged in noncompetitive transactions in violation of a CFTC regulation, according to the Order.

In settling this matter, the CFTC has taken into account Absa’s cooperation during the CFTC’s investigation.

The CFTC thanks the CME Group for its assistance.

CFTC Division of Enforcement staff members responsible for this case are Kara Mucha, Steven Kim, Kassra Goudarzi, Michael Solinsky, and Charles D. Marvine.

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Last Updated: September 25, 2014