Background Facts – An energy client involved in the proprietary trading of energy derivative and futures received an inquiry from the CFTC over allegations related to potential anomalous trading behavior. The agency sought immediate access to interview the individuals involved.
Emergency Response Issues – The principal focus of the inquiry was to look into potential market manipulation issues and their impact on the market. The client’s immediate needs required developing a quick strategy for interacting with the enforcement regulators, conducting an assessment of the underlying facts, ensuring the preservation of documents, and defending the company before the agency.
Our Role – Our lawyers quickly stepped in and negotiated with the CFTC to secure additional time to be able to conduct a quick internal investigation of the trades at issue, including interviewing the traders and risk personnel. We also helped to manage information and data preservation and production, and delivered a report based on the internal investigation. Finally, we had meetings with agency enforcement staff to explain the trading activity and why it was not manipulative.
Outcome – After the report and meetings, the CFTC has not pursued the matter any further.