Huafu HK Co. Ltd. ("Huafu"), a Hong Kong-based cotton manufacturer/exporter, agreed to pay a $225,000 civil monetary penalty to settle CFTC charges alleging violations of Form 304 ("Cotton on-Call Report") reporting requirements.
The CFTC Order specified that Huafu failed to file the required weekly Form 304 reports on approximately 78 occasions when Huafu held or controlled at least 100 cotton futures positions. A Form 304 report shows the "quantity of call cotton purchased or sold on which the price has not been fixed, together with the respective futures on which the purchase or sale is based." Filing a Form 304 report is required whenever a cotton merchant holds a reportable position in cotton of at least 100 cotton futures positions. Huafu agreed to implement internal controls in order to comply with Form 304 filing requirements.
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