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Power & Pipes

FERC, CFTC, and State Energy Law Developments

The Commodity Futures Trading Commission (CFTC) announced on September 28 that it has created an Insider Trading & Information Protection Task Force. The new task force is responsible for identifying and charging those who engage in insider trading or otherwise improperly use confidential information in connection with any market regulated by the CFTC. The task force is composed of members from the CFTC’s offices in Chicago, Kansas City, New York, and Washington, DC.

The CFTC’s announcement followed a civil enforcement action filed by the CFTC that same day in the Southern District of New York. In the action, the CFTC alleges that a Houston-based energy commodities trader misused clients’ information to assist a friend in profiting from CFTC-jurisdictional energy derivative trades. The CFTC’s complaint alleges that the trader used nonpublic information he gained from making block trades of energy contracts on ICE Futures US, in violation of the Commodity Exchange Act and CFTC regulations. The CFTC also charged the trader’s employer, EOX Holdings LLC, with failing to maintain certain required records and failing to diligently supervise its employees.

In announcing the task force, CFTC Director of Enforcement James McDonald stated that insider trading “significantly undermines market integrity and harms customers.” Director McDonald noted that the enforcement actions against the trader and EOX demonstrate that “the Commission will vigorously pursue this type of misconduct.”