CFTC reaches agreement with quantitative trader charged with futures trading fraud
The Commodity Futures Trading Commission (CFTC) and Dichao Xie, a trader charged with fraud, have negotiated and reached an agreement.
On September 11, 2023, the regulator and the trader filed a proposed consent order with the Illinois Northern District Court.
Under the terms of the order, the trader consents to a permanent injunction. He will also have to pay a civil monetary penalty in the amount of $175,772.40.
In addition, Xie agrees to pay disgorgement in the amount of $175,772.40.
Let’s recall that the CFTC filed its lawsuit against Xie in March 2023.
The CFTC complaint alleges that from December 2021 through March 2022 (“Relevant Period”), Xie was employed as a quantitative trader at a large multinational corporation (“Employer A”). In connection with his duties as a quantitative trader, he had access to Employer A’s options and futures positions and associated orders for feeder cattle.
As an employee, the trader had a duty of trust and confidence to Employer A and owed Employer A a duty to act in its best interests, keep confidential Employer A’s material non-public information, and not misappropriate this information for his own financial or personal benefit.
Despite these duties, on 71 occasions between December 15, 2021 and March 21, 2022, Xie improperly used Employer A’s material non-public information to intentionally or recklessly execute transactions on feeder cattle futures and options through his personal trading account as a counterparty to Employer A.
These transactions generated a profit for the defendant of $178,075.