Commodities exchange fraud is not new. The first forms of fraudulent commodity trading involved bucket shops, which were establishments that let people make bets on the current prices of commodities, but did not actually execute the bets on an exchange. Instead, they were placed on the shop’s books and offset by the bettors’ own resources. In some instances, successful wagerers discovered they were out of money when they tried to collect their winnings.
As a result of the emergence of these spoofing schemes, the US Department of Justice is focusing its resources on investigating and prosecuting fraud within the commodity industry. Federal prosecutors are also targeting individuals and firms that engage in fraudulent activities. They are collaborating with the Commodity Futures Trading Commission to increase their efforts in pursuing commodity fraud cases. In fact, the two agencies are expected to double down on their efforts and pursue commodities fraud cases with even greater intensity. To protect yourself from these scams, you should understand how these agencies operate and what they are doing to fight the fraudulent activity.
The DOJ and the CFTC have collaborated in the past, focusing on companies and individuals engaged in securities and commodities fraud. This new partnership will likely lead the agencies to intensify their efforts against those involved in fraudulent trading activities. In particular, firms in the commodities and derivatives markets should understand how these agencies work together. If you want to protect your company from these criminals, it is important to understand what the government expects from them.