CNCGC Hong Kong Ltd. ("CNCGC HK"), an investment and trading company, agreed to pay a $150,000 civil monetary penalty to settle CFTC charges alleging violations of Form 304 ("Cotton on-Call Reports") reporting requirements.
The CFTC Order specified that CNCGC HK failed to timely file required Form 304 reports on two occasions. Form 304 reports show "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. CNCGC HK agreed to implement a compliance program for the timely reporting of cotton transactions that requires the firm to file a Form 304 each time it carries a position of 100 or more in any one cotton futures contract.
Commentary
The CFTC Order noted that CNCGC HK held reportable positions on 53 occasions during the relevant period and, with two exceptions, had timely filed each required Form 304 with the CFTC. Those two late filings cost CNCGC HK $150,000 in civil monetary penalties, which illustrates the importance of timely compliance with various reporting obligations under CFTC rules.
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