Trader admits to manipulative and illegal conduct, enters into a cooperation agreement.
The Commodity Futures Trading Commission (CFTC) has issued an order filing and settling charges against Emilio José Heredia Collado of Lafayette, California for engaging in attempted manipulation and manipulation of a U.S. price-assessment benchmark relating to physical fuel oil products. Heredia engaged in this unlawful conduct for more than four years while employed as a fuel oil trader at a commodity trading firm and then at the U.S. affiliate of a multinational commodity trading company that acquired it.
Heredia admits the facts of his manipulation and acknowledges that his conduct violated the Commodity Exchange Act (CEA) and CFTC regulations.
The order permanently bans Heredia from trading commodity interests and requires him to comply with undertakings never to engage in other commodity-interest related activities, including applying for registration and acting as a principal, agent, officer or employee of any person registered, required to be registered, or exempt from registration. The order also imposes a $100,000 civil monetary penalty.
“This enforcement action demonstrates that manipulation of energy prices will not be tolerated, and the CFTC will aggressively protect market participants who rely on the integrity of commodity benchmarks,” said Acting Director of Enforcement Vincent McGonagle.
Separate Criminal Action
In a separate, parallel matter, the Department of Justice’s Fraud Section today announced a criminal charge against Heredia in the U.S. District Court for the Northern District of California. [See United States v. Heredia, Case No. 21-CR-0109 (N.D. Cal.)] Heredia pleaded guilty to one count of conspiracy to manipulate the price of a commodity in interstate commerce in violation of the CEA.
The order finds that from as early as June 2012 through at least August 2016, Heredia and others at the firms where he was employed sought to increase profits from their oil products trading by manipulating a U.S. price-assessment benchmark relating to physical fuel oil products in order to benefit the firms’ trading positions. Heredia also engaged in this conduct with the specific intent to manipulate the benchmark, and could and did create artificial prices.
The order recognizes Heredia’s entry into a formal cooperation agreement with the Division of Enforcement and his undertaking to continue to cooperate with the Division in connection with the subject matter of the order.
The Division of Enforcement staff members responsible for this case are Gates S. Hurand, Peter Janowski, David W. MacGregor, R. Stephen Painter Jr., Michael Cazakoff, Matthew Edelstein, Patrick Marquardt, Jordon Grimm, Lenel Hickson Jr., and Manal M. Sultan.