Washington (Platts)--21Dec2010/625 pm EST/2325 GMT

The US Commodity Futures Trading Commission on Tuesday announced the filing and simultaneous settlement of charges against a registered floor broker and the head of a natural gas delivery company for engaging in a trade allocation scheme in the natural gas futures market.

According to an order received by the CFTC on December 10 and made public Tuesday, the broker, Thomas Carroll of Mahwah, New Jersey, from January 2006 to May 2009 redirected profitable natural gas futures trades into the personal account of R. Scott Hopkins of Plano, Texas, and transferred unprofitable trades into the account of Hopkins' employer.

"This, in turn, resulted in Hopkins' employer offsetting the initial transaction at a loss," the order states.

The alleged scheme allowed Hopkins and Carroll to engage in a "risk-free trading strategy for Hopkins," the CFTC claims. The CFTC also claims Hopkins deleted his name and inserted his employer's name on certain trading account statements.

Carroll was registered with the CFTC as an associated person of a futures commission merchant from 2004 to 2008 and as a floor broker since September 2008. Hopkins, who has never been registered with the CFTC, was president, director and the head of trading for a natural gas delivery company not identified in the order. Hopkins is listed as president of the Dallas-based Hydrocarbon Exchange Corporation, according to the company's website. A phone call to Hopkins' office was not immediately returned Tuesday.

The CFTC has ordered Hopkins to pay a $650,000 civil monetary penalty and Carroll to pay a $50,000 civil monetary penalty.

The action announced Tuesday was the result of a joint CFTC enforcement investigation with the New York County District Attorney's Office of abusive trading practices on the NYMEX.

According to a CFTC announcement, Hopkins has also pleaded guilty to the state felony crime of Forgery in the Second Degree, for which the NYCDAO has recommended a sentence of probation, forfeiture of $650,000, a criminal fine of $5,000, certification that restitution has been made and 250 hours of community service. Carroll has pleaded guilty to the state misdemeanor crime of Criminal Facilitation in the Fourth Degree and was sentenced to a conditional discharge, according to the CFTC.

--Brian Scheid, brian_scheid@platts.com

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