CFTC fines SummerHaven Investment Management for wash sales
The United States Commodity Futures Trading Commission (CFTC) today issued an order imposing a fine of $500,000 on SummerHaven Investment Management LLC.
The fine is a part of a settlement with the firm, which was charged with engaging in wash sales and non-competitive transactions on the InterContinental Exchange and various Chicago Mercantile Exchange exchanges, and for failing to diligently supervise its activities.
On top of the fine, SummerHaven agrees to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations, as charged.
According to the CFTC order, SummerHaven engaged in multiple wash sales and non-competitive transactions while moving positions held by a client from one futures commission merchant (FCM) to another. Specifically, on July 2, 2018, SummerHaven placed offsetting buy and sell orders at each FCM, resulting in a series of pre-arranged offsetting trades in contracts for crude oil, heating oil, gasoil, live cattle, lean hogs, soybean meal, gasoline, cocoa, and cotton.
In total, SummerHaven made more than 100 non-competitive prearranged trades with an aggregate value of more than $570 million. The order finds that SummerHaven failed in its supervisory duties because it did not have policies or procedures in place to prohibit wash sales or non-competitive transactions, and because the decision to execute wash sales and non-competitive transactions was reviewed and directed by senior supervisory management, including SummerHaven’s then-Chief Compliance Officer and then-Managing Partner.