BOCA RATON, Florida -- The U.S. Commodity Futures Trading Commission said on Wednesday it charged a former MF Global broker with attempted manipulation of palladium and platinum futures prices during a two-year period on the New York Mercantile Exchange.
The CFTC complaint alleges that Joseph Welsh, while working for the firm, used a manipulative scheme commonly known as "banging the close" between at least June 2006 through May 2008 on no fewer than 12 separate occasions to alter prices.
Banging the close occurs when a trader acquires a substantial position leading up to the closing period, and then offsets the position before the end of trading to try to manipulate closing prices.
"We have some new manipulation authority" under the Dodd-Frank financial reform law enacted in 2010, said Bart Chilton, a Democratic CFTC commissioner, speaking at the Futures Industry Association annual meeting in Boca Raton.
"We're looking at all our authorities, including our new manipulation authority, and we're going to use them as aggressively as we can," continued Chilton, who was not speaking directly about this case.
The CFTC said in a statement it is seeking civil monetary penalties, trading and registration bans, and a permanent injunction to stop further violations of the federal commodities laws by Welsh.
The complaint charges the former MF Global trader with directly attempting to manipulate the palladium and platinum futures prices and with aiding and abetting the attempted manipulations of Christopher L. Pia, a former portfolio manager of Moore Capital Management LLC.
The CFTC has previously filed and settled charges against Pia and Moore Capital.
MF Global filed for bankruptcy on October 31 after investors and customers became rattled over the firm's $6.3 billion bet on European sovereign debt. Investigators are still trying to find more than $1.6 billion in missing customer money.