June 19, 2015

Federal Court Orders a $500,000 Civil Penalty against Joseph F. Welsh III for Attempted Manipulation of Palladium and Platinum Futures Contracts

Federal Court Order Also Imposes Trading Restriction

Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) announced today that a federal court in New York, New York, entered a Consent Order against Defendant Joseph F. Welsh III of Northport, New York, resolving CFTC charges that Welsh attempted to manipulate the settlement prices of palladium and platinum futures contracts traded on the New York Mercantile Exchange (NYMEX).

The Order, issued by the Honorable William H. Pauley of the U.S. District Court for the Southern District of New York, assesses a civil monetary penalty of $500,000 and enjoins Welsh from violating the anti-manipulation provisions of the Commodity Exchange Act, as charged in the Complaint (see CFTC Press Release and Complaint 6210-12, March 14, 2012). The Order also permanently bans Welsh from trading CFTC-regulated palladium and platinum products. In addition, the Order requires Welsh to undertake compliance training and report annual completion thereof to the CFTC for a period of five years.

According to the Order, from at least June 2006 through May 2008, Welsh, while working as a broker at MF Global, Inc., received market-on-close orders to buy palladium and platinum futures contracts from Christopher Louis Pia, a former portfolio manager of Moore Capital Management LLC (a predecessor of Moore Capital Management, LP), with instructions to exert upward pressure on prices. Welsh waited to enter Pia’s relatively large buy orders for the relatively illiquid palladium and platinum futures contracts until the last five or ten seconds of the closing periods of those futures contracts, with the intent to manipulate the prices of those futures contracts, including the settlement prices.

Previously, on July 25, 2011, the CFTC issued an Order filing and settling similar charges of attempted manipulation of palladium and platinum futures prices against Pia. The CFTC Order required Pia to pay a $1 million civil monetary penalty and permanently banned him from trading CFTC-regulated products during any closing period, and from trading CFTC-regulated palladium and platinum products. The CFTC Order also imposed compliance undertakings related to Pia and any entity Pia owns or controls and registration conditions if Pia or any of his entities become registered with the CFTC. (See CFTC Press Release and Order 6079-11, July 25, 2011.)

In addition, on April 29, 2010, the CFTC issued an Order filing and settling similar charges of attempted manipulation of palladium and platinum futures prices against Moore Capital Management, LP and Moore Capital Advisors, LLC, both based in New York, and Moore Advisors, Ltd., a Bahamian entity. The CFTC Order required all three entities jointly and severally to pay a $25 million civil monetary penalty and placed restrictions on their CFTC registrations, including a two-year restriction on trading during the closing periods of palladium and platinum futures and options markets. (See CFTC Press Release and Order 5815-10, April 29, 2010.)

The CFTC wishes to thank the CME Group, the parent company of the NYMEX, for its assistance.

The following CFTC staff members are responsible for this case: Kara Mucha, Janine M. Gargiulo, Jo E. Mettenburg, Kassra Goudarzi, James A. Garcia, Michael Solinsky, Charles D. Marvine, and Gretchen L. Lowe.

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Last Updated: June 19, 2015