The Commodity Futures Trading Commission (CFTC) has ordered global commodities trader Trafigura Trading to pay a $55m civil penalty for what the agency described as the misappropriation of material nonpublic information and engaging in manipulative conduct that affected published benchmark rates.

The CFTC also said the Houston-based firm impeded whistleblower communications, preventing them from voluntarily communicating with the CFTC’s enforcement staff during its investigation.

Fraud and manipulation

The regulator said that, from 2014 to April 2019, Trafigura improperly obtained nonpublic information material to the gasoline market from a Mexican trading entity employee and traded on the information in breach of the employer’s rules and US law.

Trafigura received pricing formulas used to sell its physical gasoline to another trading entity in Mexico, the CFTC said. And, in 2017, the company allegedly manipulated a fuel oil benchmark to benefit its futures and swaps positions, including derivatives traded on US registered entities.

CFTC’s first whistleblower-impeding charge

Between 2017 and 2020, Trafigura required current employees and former employees to sign nondisclosure provisions, which illegally impeded them from voluntarily communicating with the agency’s enforcement staff during the investigation, the CFTC said.

The charge marked the first time the CFTC has brought an action against a firm for impeding whistleblower communications, the regulator said.

Compliance program enhancements underway

Trafigura issued a statement, noting that the payment to settle the CFTC’s investigation neither admits nor denies the accusations, and the company said it has voluntarily undertaken significant steps to enhance its compliance program.

The company also said that it has agreed to modify the nondisclosure provisions in its employment, termination, and severance agreements to make clear that nothing would prevent employees or former employees from communicating with government authorities about potential violations of law.

“This enforcement action is yet another example of the CFTC’s commitment to ensuring the derivatives markets remain free from trading abuses that undermine their integrity,” said Ian McGinley, CFTC Director of Enforcement.

In March, the Department of Justice announced that Trafigura Beheer B.V. (the trading company’s parent) would pay over $126m to resolve a Foreign Corrupt Practices Act investigation stemming from the company’s scheme to pay bribes to Brazilian government officials to secure business with Brazil’s state-owned and controlled oil company, Petróleo Brasileiro S.A. (Petrobras). Trafigura also resolved an investigation by law enforcement authorities in Brazil for related conduct.