Newedge USA, LLC was ordered by the Commodity Futures Trading Commission to pay a $700,000 penalty for submitting inaccurate large trader reports to the futures regulator and violating a prior order, the agency said on Monday.
The CFTC said that, from about March 2011 through July 2011, Newedge's large trader position reports submitted to the CFTC contained numerous errors, including overstating and understating open interest, and failing to report required positions.
These errors violate a February 7, 2011, CFTC order directing Newedge, a futures commission merchant, to improve the accuracy and timeliness of its large trader reporting.
Newedge USA said on Monday it entered into the settlement with the CFTC without admitting or denying the allegations.
In a statement, Kevin Russell, a Newedge spokesperson, said the firm "regrets" it was named in a complaint by the CFTC over its large trader reporting. He noted the CFTC pointed out efforts by Newedge to improve its large trader reporting to the agency since July 2011.
"We regret that during our re-engineering efforts, certain reports required corrections, particularly those from transactions on certain non-U.S. exchanges," said Russell. "Newedge has elected to settle with the CFTC because of these lapses."
CFTC Enforcement Director David Meister said the agency depends on large trader reports for many tasks, including monitoring compliance with speculative limit rules and assessing individual traders' activities and their potential market power and risk in various commodity and swaps interests.
"Today's action should send a message to the industry that the Commission expects its reporting rules to be strictly adhered to and that the Commission will sanction those who fail to adhere to prior Commission orders," Meister said in a statement.
Newedge is a global broker formed as a 50/50 joint venture by Societe Generale and Credit Agricole. It is one of about 200 clearing members, futures commission merchants and brokers who submit about 600,000 large trader position reports to the CFTC each day.
In addition to the civil monetary penalty, the CFTC's order requires Newedge to cease and desist from violating the Commodity Exchange Act's requirement to timely submit accurate position reports and notices, and to implement and maintain procedures to prevent and detect reporting violations of the Act and CFTC regulations.
(Reporting By Christopher Doering; Editing by Alden Bentley and Andre Grenon)