September 29, 2016

CFTC Orders Jon P. Ruggles to Disgorge More than $3.5 Million in Trading Profits and Pay a $1.75 Million Penalty for His Illegal Futures and Options Trading

Ruggles Misappropriated His Former Employer’s Confidential, Nonpublic Trading Information to Benefit His Personal Trading

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today entered an Order filing and settling charges against Jon P. Ruggles of Orlando, Florida, for engaging in fraudulent, fictitious, and noncompetitive trades in crude oil and heating oil futures and options and RBOB gasoline futures on the New York Mercantile Exchange (NYMEX), a division of CME Group, from March 2012 to December 2012. During that time, Ruggles resided and worked in Atlanta, Georgia.

The CFTC Order requires Ruggles to disgorge his ill-gotten gains, totaling $3,501,306, and imposes a civil monetary penalty of $1.75 million. Ruggles is also permanently banned from trading and registering with the CFTC.

The Order finds that Ruggles, who was responsible for developing his former employer’s fuel hedging strategies and for executing the employer’s trades in these particular NYMEX products, owed a duty of trust and confidence to act in the employer’s best interest and to keep confidential the employer’s material, nonpublic information regarding its trading activity. Per the Order, Ruggles breached these duties to the employer and misappropriated the employer’s confidential, material, nonpublic trading information for his own personal benefit — namely, by trading the same NYMEX products he traded for his former employer in personal accounts in his wife’s name, which he controlled.

CFTC Director of Enforcement Aitan Goelman commented:

“The misappropriation of confidential, nonpublic information is fraud under the Commodity Exchange Act (CEA) and CFTC Regulations and undermines the integrity of the derivatives markets. We will continue to be vigilant in clamping down on such abuses.”

Specifically, the Order finds that on at least 71 days during the relevant period, Ruggles used his former employer’s trading information to trade for his own personal benefit in personal accounts he controlled. On those days, Ruggles traded in the personal accounts the same crude oil and heating oil futures and options and RBOB gasoline futures that he traded in the employer’s accounts. Ruggles sequenced the trades in the personal and employer accounts so that the majority of his personal orders were executed against the employer’s orders and the remaining personal orders were filled by other market participants at prices advantageous to Ruggles’s orders, according to the Order. By trading in this manner, the Order finds that Ruggles misappropriated the employer’s trading information for his own benefit and committed futures and options fraud in violation of the CEA and CFTC Regulations, as charged, including CEA Section 6(c)(1) and CFTC Regulation 180.1.

The Order also finds that for the trades in his personal accounts that he executed against trades in his former employer’s accounts, Ruggles was able to avoid competitive execution, negate market risk, and all but guarantee that these trades would be executed at the prices he sought. In so doing, Ruggles engaged in fictitious and noncompetitive trading in violation of the CEA and CFTC Regulations.

CFTC Division of Enforcement staff members responsible for this case are Kara Mucha, James Humphrey IV, Kassra Goudarzi, Steven Kim, Jordon Grimm, Michael Solinsky, Thomas Simek, and Charles Marvine.

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Last Updated: September 29, 2016