June 19, 2015 / 3:30 PM / 4 years ago

Ex-MF Global trader settles CFTC manipulation claims for $500K

NEW YORK, June 19 (Reuters) - A former trader at the broker-dealer unit of MF Global Holdings Ltd’s will pay $500,000 to resolve claims that he tried to manipulate palladium and platinum futures prices, a U.S. regulator said on Friday.

The U.S. Commodity Futures Trading Commission said former MF Global Inc trader Joseph Welsh had agreed to the penalty as part of a settlement resolving a lawsuit filed by the CFTC in Manhattan federal court in 2012.

The case had tentatively been set for a June 15 trial until a deal in principle was reached last month and approved on Wednesday by U.S. District Judge William Pauley.

Under the settlement, Welsh will be permanently banned from trading CFTC-regulated palladium and platinum products and must undertake compliance training, the commission said.

Welsh neither admitted nor denied wrongdoing as part of the settlement. His lawyer, David Mollon, declined to comment.

The CFTC accused Welsh of scheming with a former portfolio manager at hedge fund Moore Capital Management to artificially inflate prices of palladium and platinum futures contracts traded on CME Group Inc’s New York Mercantile Exchange from 2006 to 2008.

Moore Capital and the former portfolio manager, Christopher Pia, previously settled related claims with the CFTC for $25 million and $1 million, respectively.

The CFTC claims also prompted class action lawsuits against MF Global, Moore and Welsh from purchasers or sellers of platinum or palladium futures and purchasers of the metals in the physical market between 2006 and 2010.

Those lawsuits have since been settled. MF Global filed for bankruptcy in 2011.

The case is U.S. Commodity Futures Trading Commission v. Welsh, U.S. District Court, Southern District of New York, No. 12-01873. (Editing by Ted Botha and Richard Chang)

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