**Release: #4144-98****For Release: May 11, 1998**

**CFTC FILES AND SETTLES ACTION
    AGAINST**

**SUMITOMO CORPORATION FOR
    MANIPULATING**

**THE COPPER MARKET IN
    1995-96**

**Company To Pay $150 Million And To Cease And Desist From Further
    Violations**

The Commodity Futures Trading Commission (CFTC) today announced that it
    was issuing an order, in
    connection with settling the matter by consent, finding that Sumitomo
    Corporation of Japan (Sumitomo) manipulated the copper market in 1995 and
    1996. In the order, which accepted an offer of settlement in which Sumitomo
    neither admitted nor denied the findings, the Commission found that
    Sumitomo engaged in a scheme to manipulate the price of copper through
    actions taken on the London Metals Exchange (LME), which caused
    artificially high prices in cash and futures markets in copper, including
    those in the United States, in violation of Sections 6(c), 6(d) and 9(a)(2)
    of the Commodity Exchange Act (CEA). The CFTC ordered the company to cease
    and desist from further violations of those provisions of the Act and to
    pay a total of $150 million. Of that amount, $125 million will be paid as a
    civil monetary penalty immediately. The remaining $25 million will be
    placed into escrow for a period of up to four years. During that period,
    that money may be used to provide restitution to persons injured by
    Sumitomo's unlawful conduct. If the money has not been paid out for that
    purpose by the end of four years, it will become part of the civil monetary
    penalty and be paid to the United States Treasury.

The settlement requires Sumitomo to cooperate with the CFTC in any
    further investigations or proceedings related to the conduct at issue.

In announcing the settlement and order, CFTC Chairperson Brooksley Born
    stated,

*"This is an historic moment in the Commission's work to protect the
    people of the United States, the United States cash and futures markets and
    their participants against market manipulation. Today's settlement imposes
    a substantial civil monetary penalty in response to misconduct which caused
    very serious harm to the United States markets and users of copper. The
    settlement also reflects consideration by the Commission of the credit
    Sumitomo deserves for constructive actions it has taken and losses it has
    suffered in the wake of the public disclosure of the misconduct. This
    settlement comes after a long and difficult investigation, in which the
    Commission has worked in unprecedented cooperation with regulatory
    authorities in the United Kingdom, in particular the Financial Services
    Authority, and with the Japanese Government. We are extremely grateful to
    the authorities in both nations."*

The Commission's Order details the circumstances of the manipulation. In
    the wake of accumulating large losses from speculative trading, the
    principal copper trader for Sumitomo engaged in a scheme, in conjunction
    with an entity operating in the United States, with the intent of
    manipulating the price of copper. In particular, during 1995 and 1996,
    Sumitomo, acting through its agent or agents, established and maintained
    large and dominant futures positions in copper metal on the LME. In the
    fall of 1995, Sumitomo stood for delivery on a significant percentage of
    its maturing futures contracts. It thereby acquired a dominant and
    controlling cash and futures market position, which directly and
    predictably caused copper prices, including prices on the United States
    cash and futures markets, to reach artificially high levels. Sumitomo's
    agent or agents took these actions expressly for the purpose of creating
    artificially high absolute prices and an artificially high premium of
    nearby prices over futures prices. Sumitomo, through its agent or agents,
    intentionally exploited these artificially high prices in order to profit
    on the liquidation of its large portfolio of futures contracts and holdings
    of LME warrants. Through these actions, the Commission found that Sumitomo
    manipulated upward the price of copper and copper futures in violation of
    Sections 6(c), 6(d) and 9(a)(2) of the Act.

Geoffrey Aronow, the Director of the Division of Enforcement, commented
    on the settlement:

*"This settlement culminates one important part of an extensive
    investigation that has demonstrated our ability to address the challenges
    of today's international markets. I am very proud of the work of the staff
    of the Division in meeting those challenges. We could not have done so
    without the help and assistance of our counterparts, including the United
    Kingdom's Financial Services Authority, and other agencies in the United
    Kingdom, and of the Japanese Government. The result today demonstrates our
    commitment to protect our markets and the citizens of the United States
    from price manipulation, no matter where the threat originates."*