Chicago 17/04/2015 - Singapore-based logistics provider CWT Commodities (Metals) Pte Ltd has agreed to pay a 100,000 pound ($149,590) fine to the London Metal Exchange (LME) for failing establish appropriate “Chinese Wall” policies within its warehousing business, the exchange said in a Friday notice.
“[The company] failed to identify two companies within its corporate group which were 'Trading Companies',” said the LME, adding that this led to insufficient information barriers between its warehousing operation and trading desks.
CWT Commodities operates LME-listed warehouses in Singapore, Malaysia, Korea, Belgium, Germany, the Netherlands, US and the United Arab Emirates.
Its commodity marketing division is organized under MRI Group Pte Ltd and its principal subsidiary MRI Trading, which trades non-ferrous ores, concentrates, refined and precious metals and their related byproducts, according the CWT website.
The notice, however, did not specifically list which two trading companies CWT failed to identify.
CWT provided false information starting in 2012 and did not disclose all corporate relationships despite repeated requests from the LME. The acts of misconduct were also uncovered by the LME, not by CWT, the notice said.
“Strict adherence to the rules on information barriers is vitally important to help ensure a level playing field between trading companies, reduce the potential for market abuse and help ensure the operation of an orderly market,” the LME said.
Nevertheless, the LME said it had no evidence that CWT used the information in a deliberate fashion to boost trading profits nor did it pass along confidential information. Also, no third parties suffered financial loss as a result of CWT’s actions.
In addition to the fine, CWT has agreed to put in place procedures to ensure that similar conduct will not recur.
It has already appointed an assurance provider to undertake a retrospective audit of the information barriers between CWT and one of the trading companies, and intends to appoint an assurance provider to undertake a retrospective audit in respect of the other.
(Editing by Tom Jennemann)