Cardozo Law Review
Abstract
On September 1, 1990, the Commodity Futures Trading Commission ("CFTC" or "Commission") issued a complaint and notice of hearing in which it alleged, inter alia, that on over sixty occasions during the period of June 23, 1987 through September 17, 1987, brokers on New York City's Coffee, Sugar, and Cocoa Exchange had executed wash trades on behalf of a number of Japanese foreign brokers. Wash trading, which is prohibited by section 4c of the Commodity Exchange Act ("the Act"), consists of the simultaneous purchase and sale of the same number of futures contracts at the same or very similar price. Ordinarily, the purchase of a futures contract obligates the buyer to take delivery of the commodity represented by the contract on a date certain. Conversely, the sale of a commodity futures contract obligates the seller to deliver the commodity represented by the contract on a date certain. The simultaneous purchase and sale of the same commodity futures contract at the same price results in a nullity, as the two sets of contractual obligations offset each other.
Keywords
Securities Law, Contracts, Lumber, Forestry, Sentencing and Punishment, Penology
Disciplines
Contracts | Law | Securities Law
Recommended Citation
Charles R. Pouncy,
The Scienter Requirement and Wash Trading in Commodity Futures: The Knowledge Lost in Knowing,
16
Cardozo L. Rev.
1625
(1995).
Available at:
https://larc.cardozo.yu.edu/clr/vol16/iss5/8