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Trader ordered to disgorge gains, pay steep penalty for fraudulent oil deals

TheU.S. Commodity Futures Trading Commission has entered an order filing andsettling charges against Jon Ruggles for engaging in fraudulent, fictitious andnoncompetitive trades in crude oil and heating oil futures and options and RBOBgasoline futures on the New York Mercantile Exchange from March 2012 toDecember 2012.

Theorder requires Ruggles to disgorge his ill-gotten gains, totaling about $3.5million, and imposes a civil monetary penalty of $1.75 million. Ruggles is alsopermanently banned from trading and registering with the CFTC.

Onat least 71 days during the relevant period, Ruggles used his former employer'strading information to trade for his own personal benefit in personal accountshe controlled. On those days, Ruggles traded in the personal accounts the samecrude oil and heating oil futures and options and RBOB gasoline futures that hetraded in the employer's accounts. Ruggles sequenced the trades in the personaland employer accounts so the majority of his personal orders were executedagainst the employer's orders and the remaining personal orders were filled byother market participants at prices advantageous to Ruggles's orders, accordingto the CFTC order. By trading in this manner, the order finds that Rugglesmisappropriated the employer's trading information for his own benefit andcommitted futures and options fraud.

Theorder also finds that, for the trades in his personal accounts he executedagainst trades in his former employer's accounts, Ruggles was able to avoidcompetitive execution, negate market risk and all but guarantee these tradeswould be executed at the prices he sought. In so doing, Ruggles engaged infictitious and noncompetitive trading in violation of the CEA and CFTC regulations.

"Themisappropriation of confidential, nonpublic information is fraud under theCommodity Exchange Act (CEA) and CFTC Regulations and undermines the integrityof the derivatives markets," CFTC director of enforcement Aitan Goelmansaid.