De la secularización y la expulsión en 1872 a la materialización del “sueño

A. Cornering of market involving cross-market manipulation

A. In re Fenchurch (CFTC – U.S.A.)

The U.S. Commodity Futures Trading Commission (“CFTC”) has provided an example involving cornering carried out through cross-market manipulation. CFTC filed and simultaneously settled an administrative action against Fenchurch

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Capital Management, Ltd (Fenchurch). In an order accepting the firm’s offer of settlement in which Fenchurch neither admitted nor denied the findings, the CFTC found that Fenchurch attempted to, and did, manipulate the value of its position in the Chicago Board of Trade’s (“CBOT’s”) Ten-Year U.S. Treasury Note futures contract by cornering the available supply of the cheapest-to-deliver notes.

According to the CFTC’s order, Fenchurch increased its position in the issue through a series of transactions in the repurchase market when the notes were in tight supply. Fenchurch exacerbated the tightness in the supply of the cheapest- to-deliver note by increasing its position and intentionally withholding the notes from the market with no legitimate economic purpose. As a result, the shorts on the futures contract were unable to obtain sufficient quantities of the notes and had to deliver a more valuable security.

The CFTC’s action against Fenchurch and its underlying investigation were coordinated with the US Securities and Exchange Commission and the CBOT, both of which initiated proceedings of their own. In the CFTC proceeding, Fenchurch was ordered to pay a civil penalty of $600,000 and to comply with several undertakings intended to guard against similar misconduct in the future. These undertakings included the imposition of enhanced reporting requirements for two years and a requirement that Fenchurch evaluate and strengthen its system of internal controls and supervision.

B. Cornering of market involving cross-border manipulation

1 - In re Sumitomo (CFTC – U.S.A.)

In May 1998, the CFTC issued an order instituting proceedings, making findings, and imposing remedial sanctions upon Sumitomo Corporation of Japan (Sumitomo). In the order, which accepted an offer of settlement in which Sumitomo neither admitted nor denied the findings, the CFTC found that Sumitomo engaged in a scheme to manipulate the price of copper. In the wake of accumulating large losses from speculative trading, the principal copper trader for Sumitomo engaged in a scheme, in conjunction with an entity operating in the United States, with the intent of manipulating the price of copper.

In particular, during 1995 and 1996, Sumitomo, acting through its agent or agents, established and maintained large and dominating futures positions in copper metal on the London Metals Exchange (“LME”). In the fall of 1995, Sumitomo stood for delivery on a significant percentage of its maturing futures contracts. It thereby acquired a dominant and controlling cash and futures market position which directly and predictably caused copper prices, including prices on the United States cash and futures markets, to reach artificially high absolute prices. This position also created a large backwardation in which the price of the commodity for near-term delivery stood at a premium to the price of the commodity for deferred delivery. Sumitomo intentionally exploited these artificially high prices in order to profit on the liquidations of its large portfolio of futures contracts and holdings of LME warrants. Through these actions, Sumitomo manipulated the price of copper and copper futures in violation of statutory regulations.

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The CFTC ordered Sumitomo to cease and desist from further violations of those provisions of the Act and to pay a total of $150 million. Of that amount, $125 million was paid as a civil monetary penalty immediately. The penalty is believed to be the largest ever imposed by an agency of the United States government. The remaining $25 million was placed into escrow for a period of up to four years. During that period, the money may be used to provide restitution to persons injured by Sumitomo’s unlawful conduct. If the money has not been paid out for that purpose by the end of four years, it will become part of the civil monetary penalty and be paid to the United States Treasury.

The settlement also requires Sumitomo to cooperate with the CFTC in any further investigations or proceedings related to the conduct at issue. The settlement is the product of an ongoing investigation in which the CFTC benefited from extensive international cooperation. Since the investigation of the copper market events involved information and activity outside our respective jurisdictions, the CFTC, UK Financial Services Authority (formerly the SIB and SFA) and Japanese government worked closely together.

(a) 2 - Cross-border manipulation case from COB - France

The following case is an example of a cross-border investigation on manipulative conduct, involving regulators essentially in France and Great Britain, although this case also involved the Spanish market.

A few years ago, an investment firm liquidated an important fund of stock portfolios concerning in particular, several French securities. To do this, the firm sold the fund of stock portfolios to a bank at a predetermined rate, the bank then took care of the resale. In the course of events, the convened transfer price was to be the rate quoted on the market at a specific hour (12:30 local time), on a predetermined date for the transfer.

However on the said liquidation date and time, a massive sale of these shares on the French market led to a sharp decline in the value of the price per securities share. Thus resulting in a much smaller total sum for the stock portfolio than expected by the firm initially selling.

The investigation conducted revealed that, the person responsible for trading at the London bank having bought the stock portfolio, had irregularly acquired knowledge of the transaction between the bank and the investment firm. This trader anticipated and sold the stock portfolio upon acquiring the certainty of the concluded formal transaction. The COB gathered the information concerning the French broker working at the English bank’s branch in France, thus enabling the English authorities to conduct a fruitful investigation. Furthermore, two hearings (to gather information) were carried out, both in the presence of FSA investigators.

In France, the COB transmitted the case to the CMF, which administered an important monetary sanction to the French intermediary. This market authority monitors and gives disciplinary sanctions for unprofessional market misconduct.

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In England, the SFA imposed the payment of a monetary compensation by the intermediary to the prejudiced investment firm. The SFA also administered an important monetary sanction on the basis of a price manipulation offence.