December 4, 2012

CFTC Files Complaint in Federal Court against Eric Moncada, BES Capital LLC, and Serdika LLC Alleging Attempted Manipulation of Wheat Futures Contract Prices, Fictitious Sales, and Non-Competitive Transactions

CFTC seeks civil monetary penalties, trading and registration bans, and permanent injunctions

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a complaint in the U.S. District Court for the Southern District of New York charging Eric Moncada (Moncada), a CFTC-registered floor broker, BES Capital LLC (BES), and Serdika LLC (Serdika) with attempted manipulation of prices of the December 2009 #2 Soft Red Winter Wheat futures contract (December 2009 Wheat Futures Contract) traded on the Chicago Board of Trade (CBOT). The CFTC complaint alleges that Moncada engaged in this unlawful conduct as an employee or agent of both BES and Serdika on numerous days in October 2009.

According to the complaint, Moncada’s scheme was to electronically enter and immediately cancel numerous large-lot orders for wheat futures that he did not intend to fill, but that he intended to use to create a misleading impression of increasing liquidity in the marketplace. As alleged, Moncada would enter orders of such a large size and at prices at or near the best bid or offer in a manner to avoid being filled and result in executed trades. The complaint alleges that Moncada would then seek to take advantage of any price movements that may have resulted from this manipulative scheme by placing smaller orders, which he hoped to fill at prices beneficial to him, on the opposite side of market from his large-lot cancelled orders.

Moncada, who traded in accounts in the names of BES and Serdika on the Globex electronic trading platform, repeatedly and persistently engaged in this scheme, which he used in attempts to drive prices, sometimes higher and sometimes lower, of the December 2009 Wheat Futures Contract, according to the complaint.

David Meister, the Director of the CFTC’s Division of Enforcement stated, “The illegal scheme alleged in the complaint, entering and quickly cancelling large-lot futures orders without any intent to consummate a trade, undermines the integrity of the market. Traders may not employ deceptive trading schemes simply to drive price. As our action today should make clear, we police the market for this type of activity and will bring charges against those who attempt to illegally game prices for their own advantage.”

The complaint alleges that Moncada engaged in other unlawful conduct, namely, entering into fictitious sales and non-competitive transactions by entering equal and opposite buy and sell orders for the December 2009 Wheat Futures Contract for the purpose of transferring positions between a BES account and a Serdika account without the intent to take a bona fide position in the market.

In its continuing litigation, the CFTC seeks civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the federal commodities laws, as charged.

The CFTC thanks the CME Group, Inc., the CBOT’s parent company, for its assistance.

The CFTC Division of Enforcement staff responsible for this case are Elizabeth Davis, Andrew Ridenour, Brian Walsh, Jessica Harris, Jeremy Cusimano, Russ Battaglia, Ken McCracken, Rick Glaser, and Richard Wagner. Andrei Kirilenko and Steve Yang of the CFTC Office of the Chief Economist also contributed to this action.

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Last Updated: December 4, 2012