MIL-OSI USA: Federal Court Sanctions Former New Jersey Energy Broker for Role in Disclosures of Material Nonpublic Information

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Source: US Commodity Futures Trading Commission

The Commodity Futures Trading Commission today announced that the U.S. District Court for the Southern District of New York entered a consent order on February 19, 2021, resolving CFTC charges that Ron Eibschutz, a former energy broker and New Jersey resident, sought and obtained disclosures of material nonpublic information from two former employees of the New York Mercantile Exchange (NYMEX) in violation of the Commodity Exchange Act (CEA) and CFTC regulations.

The order finds Eibschutz, who was a broker of energy futures and options, liable for aiding and abetting the NYMEX employees’ illegal disclosures. The order permanently bans Eibschutz from trading commodity interests and registering with the CFTC. The order also enjoins him from future violations of the CEA and CFTC regulations, as charged, and imposes a $75,000 civil monetary penalty.

The resolution of the charges against Eibschutz concludes the first enforcement action brought by the CFTC against an exchange (here, NYMEX) charging violations of the CEA and CFTC regulations’ proscriptions against disclosures of material nonpublic information by exchange employees. [See CFTC Press Release No. 6519-13] On August 3, 2020, the U.S. District Court for the Southern District of New York approved a settlement between the CFTC and the other defendants. [See CFTC Press Release No. 8216-20]

Case Background

The order finds that on numerous occasions between 2008 and 2010, Eibschutz solicited and received from NYMEX employees material nonpublic information about derivatives trading activity that the employees obtained through their special access as NYMEX employees. The disclosures included, among other things, the identities of counterparties to transactions in options for crude oil and natural gas futures, as well as trade details such as price and volume.

The CFTC thanks and acknowledges the assistance of the Alberta Securities Commission.

The Division of Enforcement staff members responsible for this case are Trevor Kokal, Patrick Daly, Alejandra de Urioste, Gabriella Geanuleas, David Newman, James Wheaton, Patryk J. Chudy, David W. MacGregor, Lenel Hickson, Jr., and Manal M. Sultan.

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