October 24, 2019  

CFTC Charges Upstream Energy Services with Acting as an Unregistered Futures Commission Merchant

Washington, DC – The U.S. Commodity Futures Trading Commission announced today that it issued an order filing and settling charges against Upstream Energy Services LLC of Houston, Texas requiring it to pay a $75,000 civil monetary penalty for acting as an unregistered Futures Commission Merchant (FCM).

“The Commission will continue to vigorously pursue violations of the registration requirements of the Commodity Exchange Act, which are designed to protect market participants and ensure market integrity,” said CFTC Director of Enforcement James McDonald.

The order finds that between April 2017 and September 2018, Upstream, which has never been registered with the CFTC, accepted orders from two corporate clients to trade natural gas commodity futures and options on NYMEX, a futures exchange and designated contract market.  Upstream placed orders and entered into transactions on behalf of these clients in the company’s trading accounts. Upstream also extended credit to their clients by providing margin and money on their behalf to trade in Upstream’s accounts. In addition, Upstream received fees as compensation for its services in connection with the futures and options orders and transactions. Given these activities, the order finds that Upstream violated the Commodity Exchange Act (CEA) by acting as an FCM without being registered with the Commission.

The order recognizes Upstream’s cooperation with the Division of Enforcement’s investigation and notes that their assistance is reflected in the form of a substantially reduced civil monetary penalty. In addition to the civil monetary penalty, the CFTC orders Upstream to cease and desist from further violations of the FCM registration provision of the CEA. 

The Division of Enforcement staff responsible for this case are W. Derek Shakabpa, John Buffington, Alben Weinstein, Patryk J. Chudy, Lenel Hickson, Jr., and Manal M. Sultan.

-CFTC-