CFTC still reviewing settlement with commodity broker Ron Eibschutz
The United States Commodity Futures Trading Commission (CFTC) needs more time for the review of the proposed order settling the charges against commodity broker Ron Eibschutz.
On January 29, 2021, the CFTC filed a status report with the New York Southern District Court, asking for more time to complete the review of the proposed consent order executed by Eibschutz to settle the remaining claim against him. This would resolve the litigation in its entirety.
Although the Commission prosecutes actions through its Division of Enforcement, the Division itself does not possess independent settlement authority. Rather, the Division presents executed offers of settlement with its recommendation to the agency’s Commissioners, and requests authorization from the Commission to execute the proposed consent order on behalf of the Commission.
The CFTC is in the process of reviewing the Division’s recommendation that the Commission enter into the proposed settlement with Eibschutz, and needs additional time to complete its review. The parties in this case jointly request that the Court continue the stay. The parties propose to submit a status report on or before February 26, 2021.
Eibschutz is one of the defendants in a case about disclosures of nonpublic information about customer trades.
Let’s recall that, in May 2013, the Commission charged Eibschutz with aiding and abetting disclosures of material nonpublic information about customer trades in its case against the CME Group’s New York Mercantile Exchange and two former employees, William Byrnes and Christopher Curtin.
The complaint charged CME NYMEX, Byrnes, and Curtin with violating the Commodity Exchange Act (CEA) and CFTC Regulations through the repeated disclosures during a two and one-half year period of material nonpublic customer information to Eibschutz, an outside commodity broker who was not authorized to receive the information, and charged Eibschutz with aiding and abetting the violations.
According to the allegations, a least from in or about February 2008 to September 2010, Byrnes knowingly and willfully disclosed material nonpublic information about CME NYMEX trading and customers, including about trades cleared through CME ClearPort, to Eibschutz on at least 60 occasions.
The Complaint further alleges that between May 2008 and March 2009, Curtin knowingly and willfully disclosed the same type of information to Eibschutz on at least 16 additional occasions.
The nonpublic customer information unlawfully disclosed by Byrnes and Curtin, in conversations often captured on tape, included details of recently executed trades, the identities of the parties to specific trades, the brokers involved in trades, the number of contracts traded, the prices paid, the structure of particular transactions, and the trading strategies of market participants, according to the amended Complaint.
The Complaint alleges that Eibschutz aided and abetted the violations of the CEA and CFTC Regulations, including by, among other things, repeatedly soliciting Byrnes and Curtin for the specific material nonpublic information they disclosed to him and providing them with information they needed to identify and locate information about the specific trades in which Eibschutz was interested.
According to the letter submitted by the CFTC on December 21, 2020, the proposed agreement will settle the remaining claim against Eibschutz which would resolve the litigation in its entirety. A proposed Consent Order will be submitted for the Court’s consideration upon receipt of Commission approval.
The parties propose to submit a status report on or before January 29, 2021, advising the Court with respect to the status of the Commission’s review and approval of the proposed settlement with the Eibschutz.