CFTC Hits Trafigura with $55M Penalty, Awards Whistleblower in Dramatic Day

In a dramatic series of events, the Commodity Futures Trading Commission has ordered Trafigura Trading LLC, a major global commodities merchant, to pay $55 million to settle charges of fraud, market manipulation, and impeding communications with the agency. Additionally, the CFTC awarded over $8 million to an insider whistleblower whose significant information and assistance led to multiple enforcement actions by the CFTC and other agencies.

According to the CFTC order, between 2014 and 2019 Trafigura traders knowingly traded gasoline contracts while in possession of confidential material non-public information misappropriated from a Mexican trading firm. This included pricing data and import volumes that gave Trafigura an illegal trading advantage.

The agency also found that in February 2017, Trafigura deliberately manipulated a U.S. Gulf Coast fuel oil pricing benchmark to benefit its derivatives trading positions tied to that benchmark price. Additionally, from 2017 to 2020 the CFTC alleges Trafigura required employees to sign non-disclosure agreements with provisions prohibiting communications with regulators like the CFTC, in violation of federal whistleblower protections.

"Trafigura misappropriated material non-public information and engaged in manipulative conduct that affected published benchmark rates," said CFTC Enforcement Director Ian McGinley. "This action demonstrates our commitment to market integrity."

In her concurring statement, Commissioner Summer K. Mersinger raised concerns about the CFTC's assertion that Trafigura's non-disclosure agreements themselves constituted an illegal "action to impede" whistleblowing under the agency's regulations.

Mersinger argued the mere existence of a confidentiality agreement without an explicit whistleblower carve-out does not meet the regulatory definition of an impeding "action," which she contends requires actual enforcement or threats of enforcement.

"If the Commission wants to impose an affirmative duty for employee agreements to include whistleblower carve-out language, it should amend its rule, not simply declare a new interpretation in an enforcement case," Mersinger stated.

She accused the Commission of overreaching by retroactively finding a violation based on an obligation it had never previously articulated or gave notice of to companies.

CFTC Commissioner Caroline D. Pham also expressed concerns about the handling of the case. She criticized the CFTC for what she called a new interpretation of a 7-year-old rule, arguing that the Commission should provide clear notice and guidance rather than retroactively enforcing new interpretations. She emphasized the need for transparency and sufficient evidence before voting on such matters and called for a GAO study on the CFTC’s internal procedures.

Alongside the $55 million penalty, the CFTC order requires Trafigura to implement remedial compliance measures going forward. The enforcement case stems from coordinated investigations by the CFTC's taskforces on corruption and insider trading.

While agreeing to the settlement, Trafigura did not admit or deny any of the CFTC's findings laid out in the order.

CFTC Awards Over $8 Million to Insider Whistleblower

The CFTC also recently announced that it awarded over $8 million to an insider whistleblower who provided significant information and assistance that led the CFTC and other agencies to bring multiple enforcement actions. The whistleblower helped establish that one or more derivatives market participants deceived clients about key aspects of trades.

“This is an important whistleblower whose information led multiple regulators to bring multiple enforcement actions,” said Director of Enforcement Ian McGinley. “The whistleblower’s assistance enabled the CFTC and other agencies to more efficiently investigate and prosecute the misconduct.”

The whistleblower’s involvement provided valuable insider information, saving substantial time and resources, resulting in stronger cases. The CFTC’s Whistleblower Program, established under the Dodd-Frank Act, has awarded approximately $380 million since 2014, related to enforcement actions totaling more than $3.2 billion in sanctions. Whistleblowers are eligible for awards of 10-30% of the monetary sanctions collected.

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