CFTC lets platinum futures close-banger move on to other precious metals

Section:

Ex-Moore Manager Given Platinum Futures Ban

By Greg Meyer
Financial Times, London
Monday, July 25, 2011

http://www.ft.com/intl/cms/s/0/31da5376-b6ff-11e0-a8b8-00144feabdc0.html

A former portfolio manager at Moore Capital, one of the world's most successful hedge funds, has been barred from trading US platinum and palladium futures after the government said he tried to manipulate the two small commodities markets.

Christopher Pia, now with hedge fund Pia Capital, has been ordered to pay $1 million to settle charges that he frequently tried to drive up closing prices for the precious metals on the New York Mercantile Exchange.

The Commodity Futures Trading Commission said Mr Pia executed large orders through a floor clerk in the last 10 seconds of trading, roiling what the regulator called "thinly traded" and "illiquid" markets between November 2007 and May 2008.

... Dispatch continues below ...



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Mr Pia is also permanently prohibited from trading any US futures and options on futures when markets are about to close, the CFTC said. He is required to inform current and prospective investors about the settlement, the regulator said.

The deal follows an April 2010 settlement in which Moore Capital, led by Louis Bacon, paid $25 million in response to charges related to Mr Pia's conduct, the CFTC said. Mr Pia left Moore in autumn 2008, the regulator said.

"To protect market participants and promote market integrity, individuals who attempt to manipulate commodity prices must and will be held personally accountable," said David Meister, CFTC director of enforcement. "As demonstrated by today's action, the commission will not hesitate to impose significant sanctions on such traders."

Pia Capital said in a statement: "Christopher Pia is pleased to have settled with the CFTC in order to put this matter behind him. Pia Capital, his current firm, is committed to abiding by the CFTC order and to maintaining the highest level of compliance."

The firm has about $400 million under management, according to an investor.

Mr Pia's trading frequently accounted for a "significant portion" of the volume in Nymex platinum and palladium futures, the CFTC said. The number of palladium and platinum traders on the Nymex floor "was fewer than 10 on any given date," the CFTC said.

Mr Pia's orders hitting the floor typically ranged from 20 to 100 contracts, "which were relatively large orders," the CFTC said.

"Pia's trading strategy took advantage of these key characteristics of these two futures markets -- thinly traded, illiquid, and volume-weighted average settlement price calculations -- to attempt to manipulate the daily settlement prices," the CFTC order said.

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Prophecy Platinum Reports 10.97 Million Ounces Inferred
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An independent resource report on the Wellgreen project in the Yukon Territory in Canada has just confirmed that it as one of the largest platinum group metals projects in Canada and one of the few outside South Africa, Prophecy Platinum Corp. Chairman John Lee says.

The report, compliant with Canadian National Instrument 43-101, was written by geologist Todd McCracken of Wardrop Engineering Inc., a Tetra Tech company. It incorporated drill data from 701 diamond drill holes (182 surface and 519 underground) totaling more than 53,222 metres. Using a 0.4 percent nickel equivalent cutoff grade, the Wellgreen deposit now contains a total inferred resource of 289.2 million tonnes at an average grade of 0.53 g/t platinum, 0.42 g/t palladium, 0.23 g/t gold (1.18 g/t PGM and gold), 0.38 percent nickel, and 0.35 percent copper. Separately, the deposit also contains an indicated resource of 14.3 million tonnes at an average grade of 0.99 g/t platinum, 0.74 g/t palladium, 0.52 g/t gold (2.25 g/t PGM and gold), 0.69 percent nickel, and 0.69 percent copper.

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