Futures regulators fined Morgan Stanley $14 million for failing to report a big block oil trade and fined Moore Capital $25 million for attempting to manipulate palladium and platinum futures.
The two settlements come as the Commodity Futures Trading Commission begins to exert more authority over the markets it regulates and as Congress contemplates handing it far more power over the vast over-the-counter derivatives markets.
The CFTC also ordered UBS Securities to pay a $200,000 penalty tied to the Morgan Stanley settlement.
The firms neither admitted nor denied the charges, the CFTC said.
In the Morgan Stanley agreement, the CFTC said a trader from the company arranged a block crude oil trade with a UBS broker for Feb. 6, 2009, but the two agreed to delay reporting the trade until after the market closed.
NYMEX rules require block trades to be reported within five minutes of execution.
The CFTC also ordered Morgan Stanley to step up its training for traders and enhance its surveillance of trade-at-settlement block trades on the NYMEX for three years. In a statement, Morgan Stanley said it cooperated with the CFTC investigation.
"As the CFTC indicates, this matter concerned an isolated request by a former Morgan Stanley trader," the company said. UBS declined comment.
The CFTC said UBS reported the incident and the potential violation after the company learned about the trade from its broker.
Separately, the CFTC fined Moore Capital Management — one of the largest and most consistently profitable hedge funds — for trying to manipulate the settlement prices of platinum and palladium futures contracts on the New York Mercantile Exchange.
The CFTC said Moore's fund portfolio manager tried to manipulate platinum and palladium futures from at least November 2007 through May 2008 by entering trades in the last 10 seconds of trading in a manner designed to exert upward pressure on the settlement prices.
The practice is known as "banging the close." In addition to the fine, Moore Capital has restrictions on its trading activities for three years, including a two-year restriction its trades within 15 minutes of and during the close in the platinum and palladium futures and options markets, the CFTC said.
Moore Capital said the individual involved in the settlement case left the company in the fall of 2008.
"Neither Moore Capital's principals nor its current management were involved in any improper trading, and none have been accused of any wrongdoing," the fund said in a statement.
The CFTC has been stepping up enforcement efforts, and in 2009 said its enforcement program filed 25 percent more cases than in the prior fiscal year, collecting $280 million in fines.
The biggest market manipulation charges from the top U.S. futures regulator were in 2007, when BP Products North America agreed to pay $303 million in sanctions for attempting to manipulate the propane market in the north-eastern United States in 2003-2004.
In 2004, Enron Corp was fined $35 million for manipulating the natural gas market, among other charges. Last December, CFTC sanctioned MF Global Inc $10 million for supervisory violations.
Earlier this year, the CFTC fined UBS $130,000 for exceeding spot-month position limits in natural gas, heating oil and platinum futures contracts between 2006 and 2008.
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