CFTC Slaps Connecticut Firm with $500,000 Fine over Wash Sales

The US Commodity Futures Trading Commission (CFTC) has hit SummerHaven Investment Management LLC, a Connecticut commodity trading advisor and commodity pool operator, for 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.

The order requires SummerHaven to pay a civil monetary penalty of $500,000 and to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations, as charged.

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According to the 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.

Fazzaco earlier reported the Commodity Futures Trading Commission announced an award of approximately $3 million​ to a whistleblower who provided specific, credible, and timely tip leading the CFTC to open an investigation and ultimately bring a successful enforcement action.