Posted: Thursday, December 13, 2012 12:00 PM
Moncada accused of floating, canceling large orders to alter commodity prices
By MATEUSZ PERKOWSKI
A federal regulator has accused a commodity futures trader in New York of unlawfully trying to profit by manipulating wheat prices.
The U.S. Commodity Futures Trading Commission has filed a civil complaint alleging that broker Eric Moncada and two affiliated companies, BES Capital and Serdika, violated federal trading laws and regulations.
The agency has asked a federal judge to prohibit Moncada and the two firms from any involvement in commodity trading, as well as penalties of $140,000 or triple the amount of their profits from the scheme, whichever is greater.
Capital Press was unable to contact the defendants by press time.
According to CFTC's complaint, Moncada repeatedly attempted to artificially boost or deflate prices for soft red winter wheat and make bets that would allow him to gain from the shift.
Moncada would enter large "buy" orders for the crop at high or low prices, depending on which direction he wanted the market to move, and then quickly cancel them, the complaint said.
This activity was aimed at creating an illusion of upward or downward pressure on soft red winter wheat prices -- in the meantime, Moncada would follow through with smaller "buy" or "sell" orders that allowed him to profit from the change, the complaint said.
The transactions took place in a matter of seconds on multiple occasions in 2009, with Moncada taking advantage of slight upticks or downticks of pennies per bushel in the crop's price, according to the complaint.
"Moncada's manipulative scheme was intended to capture immediate gains over a short period of time, and was distinct from his other trading activity throughout the day," the complaint said.
David Meister, director of the agency's enforcement division, issued a statement saying that such activity "undermines the integrity of the market."
The complaint makes clear that "we police the market for this type of activity and will bring charges against those who attempt to illegally game prices for their own advantage," Meister said.