* Morgan Stanley fined $14 mln for hidden block oil trade
* Moore Capital hit $25 mln for platinum, palladium trades
* Latest fines as CFTC power set to expand
(Recasts, updates with more details about settlements and
comments from Morgan Stanley, Moore Capital)
By Christopher Doering and Roberta Rampton
WASHINGTON, April 29 U.S. futures regulators
fined Morgan Stanley (MS.N) $14 million for failing to report a
big block oil trade and fined Moore Capital $25 million for
attempting to manipulate palladium and platinum futures.
The two settlements come as the Commodity Futures Trading
Commission begins to exert more authority over the markets it
regulates and as Congress contemplates handing it far more
power over the vast over-the-counter derivatives markets.
The CFTC also ordered UBS Securities Inc UBSN.VX to pay a
$200,000 penalty tied to the Morgan Stanley settlement.
The firms neither admitted nor denied the charges, the CFTC
In the Morgan Stanley agreement, the CFTC said a trader
from the company arranged a block crude oil trade with a UBS
broker for Feb. 6, 2009, but the two agreed to delay reporting
the trade until after the market closed.
NYMEX rules require block trades to be reported within five
minutes of execution.
The CFTC also ordered Morgan Stanley to step up its
training for traders and enhance its surveillance of
trade-at-settlement block trades on the NYMEX for three years.
In a statement, Morgan Stanley said it cooperated with the
CFTC investigation. "As the CFTC indicates, this matter
concerned an isolated request by a former Morgan Stanley
trader," the company said.
UBS declined comment. The CFTC said UBS reported the
incident and the potential violation after the company learned
about the trade from its broker.
Separately, the CFTC fined Moore Capital Management -- one
of the largest and most consistently profitable hedge funds --
for trying to manipulate the settlement prices of platinum and
palladium futures contracts on the New York Mercantile
The CFTC said Moore's fund portfolio manager tried to
manipulate platinum and palladium futures from at least
November 2007 through May 2008 by entering trades in the last
10 seconds of trading in a manner designed to exert upward
pressure on the settlement prices. The practice is known as
"banging the close."
In addition to the fine, Moore Capital has restrictions on
its trading activities for three years, including a two-year
restriction its trades within 15 minutes of and during the
close in the platinum and palladium futures and options
markets, the CFTC said.
Moore Capital said the individual involved in the
settlement case left the company in the fall of 2008.
"Neither Moore Capital's principals nor its current
management were involved in any improper trading, and none have
been accused of any wrongdoing," the fund said in a statement.
The CFTC has been stepping up enforcement efforts, and in
2009 said its enforcement program filed 25 percent more cases
than in the prior fiscal year, collecting $280 million in
The biggest market manipulation charges from the top U.S.
futures regulator were in 2007, when BP Products North America
(BP.L) agreed to pay $303 million in sanctions for attempting
to manipulate the propane market in the northeastern United
States in 2003-2004.
In 2004, Enron Corp was fined $35 million for manipulating
the natural gas market, among other charges.
Last December, CFTC sanctioned MF Global Inc MF.N $10
million for supervisory violations. [ID:nN17177971]
Earlier this year, the CFTC fined UBS $130,000 for
exceeding spot-month position limits in natural gas, heating
oil and platinum futures contracts between 2006 and 2008. [ID
(Additional reporting by Charles Abbott; Editing by David