Release: 5002-04
For Release: October 4, 2004

CFTC SETTLES CHARGES AGAINST THREE UK-BASED TRADING FIRMS FOR PARTICIPATING IN ILLEGAL WASH TRADES ON U.S. MARKETS

Fimat International Banque SA, Refco Overseas Ltd. and Credit Lyonnais Rouse Limited Ordered to Pay Total of $75,000 in Civil Penalties

WASHINGTON, D.C. – The Commodity Futures Trading Commission (CFTC) announced today the filing and simultaneous settlement of charges under the Commodity Exchange Act (CEA) that Fimat International Banque SA (UK Branch), Refco Overseas Limited, and Credit Lyonnais Rouse Limited (respondents or trading firms), each knowingly participated in illegal wash trading on the Coffee, Sugar & Cocoa Exchange (CSCE), which, at the time, was a subsidiary of the New York Board of Trade. The CFTC issued orders imposing a civil penalty and other sanctions on each respondent.

The CFTC orders, issued on September 29, 2004, find that between November 2001 and July 2002, respondents, each a trading firm based in the United Kingdom, each employed certain account executives who, on at least one occasion, received and entered for execution orders that were structured by the firms' customers to meet and be crossed on the floor of the CSCE cocoa pit. On each such occasion, the orders did cross and the transactions therefore resulted in a virtual financial nullity, excluding commissions, for the customer, according to the orders.

According to the orders, because the respondents either failed to undertake an inquiry to evaluate the orders received for indications that participation in the transaction was legally prohibited or knew that the customer’s intention was to negate market risk and price competition, and thereby to avoid a bona fide market transaction, the respondents violated the CEA's prohibition against participating in illegal wash sales. Further, the orders find that the transactions resulted in the reporting of non-bona fide prices, in addition to being illegal noncompetitive trades.

The order directs the respondents to cease and desist from further violations of the CEA, to pay a $25,000 civil penalty each, and to comply with specified undertakings. In consenting to the entry of the CFTC’s order, the trading firms neither admitted nor denied the findings made in the order.
The following CFTC Division of Enforcement staff were responsible for this case: Lael Campbell, Grant Collins, Paul Hayeck, and Joan Manley.

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Media Contacts
Alan Sobba
(202) 418-5080
Dennis Holden
(202) 418-5088
Office of External Affairs

Staff Contacts
Joan Manley
Deputy Director
CFTC Division of Enforcement, (202) 418-5356

Paul Hayeck
Associate Director
CFTC Division of Enforcement, (202) 418-5312

Related Documents
Credit Lyonnais Order (CFTC Docket #04-25)
Fimat International Order (CFTC Docket # 04-26)
Refco Overseas Limited Order (CFTC Docket # 04-27)