Ex-Classic Energy broker Lee Tippett pays over $1 million to settle kickback charges
“The CFTC will vigorously pursue and take action to stop corruption among brokers and other intermediaries that facilitate trading in the derivatives markets, whether they are making illegal kickback payments or misappropriating nonpublic information. Today’s action demonstrates that the CFTC is committed to taking action against all individuals who engage in such conduct.”
The Commodity Futures Trading Commission has charged Lee Tippett, a former energy broker with Classic Energy, LLC, for participating in a scheme to pay kickbacks to Matthew Clark, a trader employed by one of Classic’s brokerage customers.
Kickback payments to Clark where allegedly made in exchange for Clark sending more brokerage business from his employer to Classic.
Lee Tippett also participated in a scheme to misappropriate confidential block trade order information from the same Classic customer, facilitated fictitious trades, and made false statements to ICE Futures US, according to the CFTC complaint.
Lee Tippet to return $695,000 in ill-gotten gains plus $500,000 fine
Acting Director of Enforcement Gretchen Lowe at CFTC, said: “The CFTC will vigorously pursue and take action to stop corruption among brokers and other intermediaries that facilitate trading in the derivatives markets, whether they are making illegal kickback payments or misappropriating nonpublic information. Today’s action demonstrates that the CFTC is committed to taking action against all individuals who engage in such conduct.”
The order requires Lee Tippett to disgorge $695,000 in ill-gotten gains, imposes a $500,000 civil monetary penalty, permanently bans Tippett from trading commodity interests, and requires him to comply with undertakings never to apply for registration or engage in any activity requiring registration with the CFTC.
The CFTC said that Classic Energy hired Lee Tippett – a longtime associate of Clark – as a broker in November 2015 for the purpose of facilitating kickback payments to Clark. Lee Tippett had no experience as a broker prior to being hired by Classic.
As part of this kickback scheme, Tippett would broker natural gas futures block trades for Clark’s employer, but would pay most of the commission income he earned on these trades back to Clark in exchange for Clark sending more brokerage business to Classic.
From 2015 to 2019, Tippett paid Clark approximately $3,185,775 by sending cash directly to Clark’s family members or by transferring money to shell companies set up by Clark. Tippett kept $695,000 of this commission income for himself.
