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Jan 27, 2021 by |

California and San Diego Whistleblower Attorneys: Blowing The Whistle On FX Options Trading Fraud

ATTORNEY NEWSLETTER

Foreign Exchange Options Trading Fraud

Commodity Futures Trading Commission Polices FX Options

CFTC Announces $7 Million Civil Penalty For FX Trading Fraud

The U.S. Commodities Futures Trading Commission (CFTC) polices the options trading markets in the U.S., including the market for foreign exchange options, also known as FX options.  FX options are derivative financial instruments that give the right (but not obligation) to trade money denominated in one currency into another currency at a pre-arranged rate on a pre-determined date.  The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), Pub. L. 111-203, established a CFTC whistleblower program to protect investors in all kinds of security, commodity, options, and derivative trading. See 7 U.S.C. § 26 et seq.  If you have information of trading fraud the CFTC whistleblower attorneys at Evans Law Firm, Inc. can assemble your information in the form required by the CFTC for investigation and possibly a reward if the agency completes a successful enforcement action including recovery of civil penalties or disgorgement of illegal gains.  If you have information of options trading fraud, call us today at (415)441-8669 or toll free at (888)503-8267.

Fraudulent FX Options Trading Case

In an order[1] announced December 20, the CFTC found that between January 2014 and August 2015, an interdealer broker operating in New York and London represented to U.S. bank clients that there were bids or offers for an FX option at a particular level when, in fact, no trading institution had bid or offered the option at that level. The order also found that the interdealer broker through its Emerging Markets desks in London and New York communicated to one or more clients that trades had occurred when a trade had not, in fact, occurred. In the FX options industry these practices are referred to as “flying” prices and “printing” trades. Both practices are deceptive under CFTC Rules because they artificially inflate (or deflate) option prices for the benefit of the broker dealer creating the fictitious tickets. Firms are accountable for supervising their traders so as to catch and stop these fraudulent trading practices.  See, e.g., 17 C.F.R. § 166.3. As a result of these deceptive practices, the CFTC fined the trading firm $ 7 million in civil penalties and two of the trading desk heads $500,000 each for failing to supervise diligently their traders’ conduct.

Rewards In Covered Actions

Any individuals who provides the CFTC with information of the fraud are entitled to a reward. A CFTC case begins with a TCR (“Tip, Complaint, or Referral”) Form filed with the Commission. The Commission recommends that whistleblowers seek the counsel of experienced CFTC/SEC whistleblower attorneys to assist them in the process of submitting a TCR form. This will ensure they take the proper steps to remain anonymous and qualify for a whistleblower award.  Once the CFTC determines a fine or obtains any recovery based on the information contained in the TCR then submit a Form WB-APP with the CFTC to claim a reward for the information they provided that led to the successful enforcement action.

Contact Us

Ingrid M. Evans and the other CFTC whistleblower attorneys at the Evans Law Firm know how to present your information on a TCR with the best chance for an ultimate reward if the CFTC elects to take action and the enforcement action is successful.  Call Ingrid and the firm’s other CFTC whistleblower attorneys today at (415) 441-8669, or toll free at (888)503-8267 or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>.  Ingrid and our other whistleblower attorneys also represent whistleblowers in cases involving the False Claims Act, offshore tax avoidance schemes or other tax fraud before the Internal Revenue Service, and bank fraud under the Financial Reform, Recovery, and Enforcement Act (FIRREA/FIAFEA),

[1] Evans Law Firm, Inc. was not involved in this case in any way.

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