The U.S. Commodity Futures Trading Commission (CFTC) on April 15, 2011, filed an enforcement action charging an employee of Citigroup Global Markets Ltd., Otmane El Rhazi, a Moroccan national and resident of the United Kingdom, with noncompetitive trading, fraud and misappropriation from a Citibank, N.A. proprietary account.
The CFTC complaint was filed in the U.S. District Court for the Southern District of New York. That same day, the court entered a restraining order freezing El Rhazi's assets and prohibiting El Rhazi from destroying books and records.
The complaint charges that El Rhazi engaged in numerous noncompetitive and fictitious futures trades in order to steal money from a Citibank, N.A. proprietary account for which he exercised trading authority as an employee of Citigroup Global Markets Ltd. and pass the money to his own personal account.
Specifically, the CFTC complaint alleges that, between November 23, 2010, and April 5, 2011, El Rhazi engaged in a series of noncompetitive palladium and platinum futures transactions. The futures contracts were offered by the New York Mercantile Exchange on the Chicago Mercantile Exchange's Globex electronic trading platform. El Rhazi allegedly caused the Citibank, N.A. account to trade in illiquid contracts opposite his personal account at off-market prices. According to the complaint, the effect of the transactions was that there was no net change in open positions of either El Rhazi's account or the Citibank, N.A. account. However, in each offsetting transaction, El Rhazi allegedly profited, and the Citibank, N.A. account lost approximately $300,000.
In its continuing litigation, the CFTC seeks a permanent injunction against further violations of the federal commodities laws, restitution, disgorgement of ill-gotten gains, a civil monetary penalty and other equitable relief.
The CFTC thanks the U.K. Financial Services Authority for its assistance.
The CFTC staff members responsible for this matter are Christopher Giglio, Elizabeth Padgett, David W. Oakland, K. Brent Tomer, Manal Sultan, Lenel Hickson, Stephen J. Obie, Vincent McGonagle, Brian Rushton, Vincent Varisano and Marshall Horn.