UNITED STATES OF AMERICA    

       Before the    

       COMMODITY FUTURES TRADING COMMISSION    

       ______________________________________� :    

       In the Matter of      �����������������������������������������������������      : CFTC Docket No.�    

       ���������������������������������������������������������������������������      � :    

       SUMITOMO CORPORATION,      ����������������      ���������� : ORDER      INSTITUTING    

       �������������������������������������      ����������������������������������������      : PROCEEDINGS PURSUANT TO    

       Respondent.      ����������������������������������������������������������      : SECTIONS 6(c) AND 6(d)    

       ������������������������������������������������������������������������������      : OF THE COMMODITY EXCHANGE    

       �������������������������������������������������������������������������������      : ACT AND FINDINGS AND    

       �������������������������������������������������������������������������������      : ORDER IMPOSING    

       ________________________________________: REMEDIAL SANCTIONS    

       �    

       I.    

       The Commodity Futures Trading Commission ("Commission") has      reason to believe that Sumitomo Corporation ("Sumitomo"),      through the acts of one or more of its employees and agents, has violated      Sections 6(c), 6(d) and 9(a)(2) of the Commodity Exchange Act, as amended      ("Act"). Therefore, the Commission deems it appropriate and in      the public interest that public administrative proceedings be, and they      hereby are, instituted in order to determine whether Sumitomo engaged in      the violations set forth herein and to determine whether any order should      be issued imposing remedial sanctions.    

       II.    

       In anticipation of the institution of these administrative proceedings,      Sumitomo has submitted an Offer of Settlement ("Offer") which      the Commission has determined to accept. Without admitting or denying the      findings herein, Sumitomo acknowledges service of this Order Instituting      Proceedings Pursuant to Sections 6(c) and 6(d) of the Commodity Exchange      Act and Findings Imposing Remedial Sanctions ("Order").      Sumitomo, solely by virtue of its Offer and for purposes of settling this      proceeding, before argument or adjudication of any issue of fact or law,      consents to the use of the findings contained in this Order in this      proceeding and in any other proceeding brought by the Commission or to      which the Commission is a party. Sumitomo does not consent to the use of      the Offer or this Order as the sole basis for any other proceeding      brought by the Commission, or to the use of the Offer or this Order      against it in any other proceeding by any other party. The findings      contained in this Order are not binding on any other    

       person or entity named as a defendant or respondent in any other      proceeding.    

       III.    

       The Commission finds the following:    

       A. SUMMARY    

       As described in more detail below, 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 dominating futures positions      in copper metal on the London Metals Exchange ("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 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, 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.    

       Sumitomo contends that its copper trader�s actions described below      were unauthorized and hidden from other company officials. The Commission      makes no findings with regard to those contentions. It believes that,      without regard to those contentions, Sumitomo is properly found to have      violated the manipulation provisions of the Act.    

       B. RESPONDENT    

       Sumitomo is a Japanese corporation with its principal place of business      in Tokyo, Japan. During the relevant period, Sumitomo was engaged, among      other things, in the marketing of copper cathode to customers throughout      the world. As part of its business of marketing copper, Sumitomo engaged      in futures and option transactions on world markets, including the Comex      Division of the New York Mercantile Exchange ("Comex") and the      LME, primarily for the purpose of "hedging" the price risks      associated with the purchase and sale of copper. These copper marketing      and trading functions were primarily carried out by the Copper Metals      Section of Sumitomo's Non-Ferrous Metals Department.    

       C. FACTS    

       1. Sumitomo's Copper Trading

       Sumitomo, which was incorporated in 1919, has, together with its      historical predecessors, been involved in the marketing of copper metal      for hundreds of years. During the period at issue in this matter,      Sumitomo's copper metals business was conducted by the Copper Metals      Section of the Non-Ferrous Metals Department. The primary business of the      Copper Metals Section, or Copper Team as it was also known within      Sumitomo, was supplying copper cathode to customers (primarily in Asia),      such as cable fabricators and rod mills. In addition to sales to      customers, the business also included the extensive use of the futures      markets to hedge the price risks occasioned by the volatility of copper      prices. Both the purchase and sale of physical copper and hedging with      futures, known within Sumitomo as "dealing," were carried out      by the Copper Metals Section.    

       In April 1970, Sumitomo first employed an individual who, in April 1973,      was assigned to the Copper Metals Section. By 1975, that individual had      become involved in the physical purchase and sale of copper and in      dealing, under the overall supervision of the head of the Non-Ferrous      Metals Department. In August 1987, he was made head of the Copper Team.      From that time until at least his reassignment on May 8, 1996, he had      primary responsibility for both the actual physical purchase and sale of      copper and dealing in copper metal for Sumitomo. (This individual will be      referred to throughout this Order as "Sumitomo's copper      trader".)    

       In the period immediately prior to Sumitomo's copper trader's      appointment as head of the Copper Team and in subsequent years, the      Copper Team incurred significant losses. The losses were the result both      of the actual physical purchase and sale of copper and also of      speculative futures transactions initiated, together with another      Sumitomo employee at the time, in an unsuccessful attempt to compensate      for losses on the actual purchase and sale of copper.    

       Sumitomo's copper trader did not enter the unauthorized speculative      trades in Sumitomo�s normal bookkeeping system. Instead, he kept a      record of the transactions in a series of personal notebooks.    

       2. Sumitomo's Copper Trader's Arrangements with a U.S. Copper      Merchant

       Beginning in late 1993, Sumitomo's copper trader entered into a      series of agreements with a newly-formed U.S. copper merchant firm      located in New York City, whereby Sumitomo agreed to purchase copper from      the American firm on a monthly basis for the years 1994 through 1997. The      agreements were embodied in a series of supply contracts that contained      unusual minimum price and price participation provisions. Under the      minimum price provision, Sumitomo was obligated to purchase copper at the      higher of the market price (LME settlement price) at the time of shipment      of the monthly quota or the minimum price set by Sumitomo during a      specified time period. The contracts also required the U.S. copper      merchant firm to pay Sumitomo, as price participation, thirty percent of      any positive difference between the market price at the time of shipment      and the minimum price on futures contracts established to hedge the      supply contracts. Thus, as copper prices rose above the pre-established      minimum price, the U.S firm and Sumitomo would share in the price      appreciation, giving both firms a financial interest in higher prices.    

       By June 15, 1994, Sumitomo�s copper trader and the U.S. copper      merchant had entered into six such minimum price contracts providing for      the delivery of 834,000 metric tons of copper, on a schedule of roughly      10,000 metric tons per month in 1994 and 30,000 metric tons per month in      1995 and 1996. On December 1, 1994, they entered into another, similar      contract for delivery of 30,000 metric tons per month in 1997. The terms      of these contracts were essentially identical and in sum called for the      delivery of a total of 1,194,000 metric tons of copper from 1994 through      1997. In 1995 and 1996, these contracts were used by Sumitomo�s      copper trader and the U.S. copper merchant to provide a justification for      Sumitomo�s purported need for copper to sell to customers. However,      fully half of the 1995 and 1996 contractual copper was immediately resold      to the U.S. copper merchant�s supplier and was never actually      delivered to Sumitomo.    

       As early as February 1994, Sumitomo's copper trader and personnel at      the U.S. copper merchant firm communicated about ways they could act in      concert through market operations to cause copper prices to increase.    

       In order to effect and synchronize their joint market operations,      Sumitomo's copper trader and the U.S. copper merchant established      several highly unusual accounts, called the "B" accounts, at a      number of brokerage houses. Under the "B" account arrangements,      Sumitomo�s copper trader authorized personnel at the U.S. firm to      effectuate LME futures trades and other copper business in Sumitomo's      name and using Sumitomo's credit. Sumitomo�s copper trader gave      the U.S. copper merchant power of attorney over the trading in these      "B" accounts pursuant to documentation on which he forged the      signatures of his superiors. Concerted market actions between the two      firms took place in the ensuing years in large part through use of the      various "B" accounts.    

       During this same period, Sumitomo's copper trader and personnel at      the U.S. copper merchant were in daily communication concerning the      coordination of their market activities with a view toward increasing LME      copper prices. Sumitomo's copper trader and the U.S. copper merchant      agreed that they should strive, through their purchases of physical metal      in LME warehouses and elsewhere as well as their purchases of futures and      options contracts, to inflate artificially the market price of copper to      a level that would enable Sumitomo and the U.S. copper merchant to      liquidate their large futures market position and holdings of LME      warrants at a substantial profit.    

       3. Efforts to Manipulate Copper Prices in 1995-96

       During the summer of 1995 and through the fourth quarter of 1995,      Sumitomo's copper trader and the U.S. copper merchant plotted and      executed their scheme to push copper prices to an artificially high level      and then exit the joint operation by liquidating their massive long      futures positions and holdings of LME warrants. The focus of these      efforts ultimately was the acquisition of all of the stocks of      deliverable copper in LME warehouses. Sumitomo�s and the U.S. copper      merchant�s positions and actions during this period bore little      relationship to their legitimate merchandising needs, but rather were      specifically designed to cause artificial prices and price relationships.    

       In the fall of 1995, Sumitomo's copper trader authorized the      acquisition of 100% of LME warehouse stocks by Sumitomo, with the U.S.      copper merchant, and set out detailed instructions for the management of      Sumitomo's large portfolio of futures positions. As Sumitomo's      copper trader knew, the concentration of ownership of all, or essentially      all, of the LME warehouse stocks in the hands of cooperating market      participants and the withholding of such stocks from the market would      have the effect of increasing the price of copper and also creating a      large backwardation. These developments allowed Sumitomo�s copper      trader to liquidate, lend or roll forward Sumitomo�s large market      holdings at the higher price or price differential and thereby earn      significant profits for Sumitomo.    

       Pursuant to the plan, beginning in late October 1995, Sumitomo, through      its copper trader, rapidly increased its ownership and control of LME      deliverable warehouse stocks. By November 24, 1995, Sumitomo owned 93% of      all LME warehouse stocks through one brokerage house alone. Combined with      holdings at other brokerage houses, Sumitomo, together with the U.S.      copper merchant, owned and controlled up to 100% of LME stocks (including      in the LME warehouse in Long Beach, California) at various times in the      fourth quarter of 1995. Sumitomo also maintained large and controlling      LME futures positions during the fourth quarter, which Sumitomo and      personnel at the U.S. copper merchant managed in a manner that bore      little legitimate relationship to the marketing of physical copper to      Sumitomo's customers, but rather were specifically designed to cause      artificial prices and price relationships.    

       At the same time, cash copper prices increased sharply as did the      backwardation of cash to three-month forward prices. Once these      artificial prices and price relationships were attained, Sumitomo reaped      substantial profits by a combination of lending forward and outright      sales of positions.    

       Sumitomo's dominance and control of physical stocks as well as its      maintenance of large futures market positions persisted into spring 1996.      Beginning with the announcement of the reassignment of Sumitomo�s      copper trader in May 1996, Sumitomo�s market dominance began to      decline. Thereafter, copper prices dropped from highs of around $2,800      per metric ton to below $2,000 per metric ton after the announcement of      his dismissal. These price levels persisted for several months      thereafter.    

       �    

       �    

       4. Impact on Prices and Markets in the United States

       The impact on prices and markets in the United States from      Sumitomo's conduct was direct and flowed from the well-established      and well-known pricing relationships that exist between the LME and the      U.S. cash and futures markets. First, the trading on Comex was directly      affected. This was particularly true once the LME established its      warehouse in Long Beach, California. During those periods of time when      the LME price was manipulated into a premium over the Comex price, stocks      in the United States were drawn away from Comex-designated warehouses      (principally in Arizona) to LME warehouses (principally in Long Beach,      California). Most importantly, the artificial prices and backwardation of      prices on the LME also caused prices on the Comex to become similarly      distorted and artificial as arbitrage trading between the LME and the      Comex brought Comex prices higher than they otherwise would have been.      Moreover, because copper contracts are generally priced by reference to      the LME price or the Comex price, Sumitomo's conduct caused distorted      and artificial pricing of copper, including throughout the United States      cash market.    

       �    

       D. VIOLATIONS OF SECTIONS 6(c), 6(d) AND 9(a)(2) OF THE ACT    

       Sumitomo, like any company or entity, acts through its employees or      other agents. In this instance, Sumitomo contends that the actions that      were taken by Sumitomo�s copper trader were taken without      authorization or knowledge of his superiors. As noted earlier, the      Commission makes no findings with regard to that contention.      Nevertheless, the Commission is satisfied that pursuant to Section      2(a)(1)(A)(iii) of the Act, 7 U.S.C. � 4, the "act[s],      omission[s] or failure[s]" of Sumitomo�s copper trader and any      other agents or employees of Sumitomo in connection with the events      described in this order are properly deemed those of Sumitomo. Thus, as      discussed in more detail below, in pursuing the course of action set      forth above, Sumitomo attempted to manipulate and did manipulate upward      the price of copper in interstate commerce and for future delivery on or      subject to the rules of a contract market, in violation of Sections 6(c),      6(d) and 9(a)(2) of the Act, 7 U.S.C. � 9, 13(b)and 13(a)(2).    

       As the United States Court of Appeals for the Eighth Circuit stated,    

       We think the test for manipulation must largely be a    

       practical one if the purposes of the Commodity Exchange    

       Act are to be accomplished. The methods and techniques    

       of manipulation are limited only by the ingenuity of man.    

       The aim must be therefore to discover whether conduct has    

       been intentionally engaged in which has resulted in a price    

       which does not reflect basic forces of supply and demand.    

Cargill, Inc. v. Hardin, 452 F. 2d 1154, 1163 (8th Cir. 1971).    

       The Commission has set forth the following elements of manipulation:    

       (1) that the [respondent] had the ability to influence    

       market prices;    

       (2) that [the respondent] specifically intended to do so;    

       (3) that artificial prices existed; and    

       (4) that the [respondent] caused an artificial price.    

In re Cox, [1986-1987 Transfer Binder] Comm. Fut. L. Rep. (CCH)    

       & 23,786, at 34,061 (CFTC July 15, 1987).    

       First, Sumitomo certainly had the ability to influence market prices.      Sumitomo held massive futures positions and ultimately acquired virtually      total ownership of LME warrants. Sumitomo strategically withheld these      physical holdings from the marketplace until prices rose to levels that      were consistent with Sumitomo's trading objectives. Copper prices      rose to artificial levels to attract new supplies not already controlled      by Sumitomo to satisfy Sumitomo's continued demand for copper.    

       Second, the Commission has long recognized that the intent to create an      artificial or distorted price is the sinequanon of      manipulation. In the Matter of Indiana Farm Bureau Cooperative      Association, Inc.,[1982-1984 Transfer Binder] Comm. Fut. L. Rep.      (CCH) &21,796, at 27,282 (CFTC December 17, 1982). In the words of      the Fifth Circuit, "there must be a purpose to create prices not      responsive to the forces of supply and demand; the conduct must be      calculated to produce a price distortion." Volkart Brothers, Inc.      v. Freeman, 311 F. 2d 52, 58 (5th Cir. 1962). Manipulation is, at      bottom, "the creation of an artificial price by planned action,      whether by one man or a group of men." General Foods Corp. v.      Brannan, 170 F. 2d 220, 231 (7th Cir. 1948), cited with approval in      Indiana Farm, �21,796 at 27,281.    

       It is clear that Sumitomo, through its agent or agents, intentionally      acquired and maintained a dominant and controlling position in both the      physical supply of deliverable LME warehouse stocks and in maturing LME      futures positions. At various times within the period in question,      Sumitomo owned virtually all deliverable LME copper stocks. These      positions were not intended to meet Sumitomo's legitimate commercial      needs. The intent motivating the acquisition and control of both the cash      market positions and the futures market positions was expressly to create      artificially high absolute prices and artificially high and distorted      premium of nearby prices over futures prices. Sumitomo deliberately      exploited its market dominance in order to profit when market prices      became artificially high, as Sumitomo had foreseen and planned.    

       Third, artificial prices existed. Sharp price and backwardation      increases resulted from Sumitomo's acquisition of dominant cash and      futures positions which were not related to their legitimate commercial      needs. As the Commission has observed, when a price is affected by a      factor which is not legitimate, the resulting price is necessarily      artificial. See Indiana Farm,&21,796, at 27,282 n.2.    

       Finally, it is clear that Sumitomo's conduct was at least a      substantial cause of these artificial prices. As Sumitomo's      acquisition of stocks increased, LME prices increased sharply and went      into a steep backwardation which rose to over three hundred dollars. As a      result, copper moved from Comex warehouses in Arizona to the LME      warehouse in California. Moreover, by virtue of arbitrage trading and      other factors linking the trading of copper on the Comex with that on the      LME, Sumitomo's activity caused the upward manipulation of copper      futures prices on the Comex. Because copper contracts are generally      priced based on the LME price or the Comex price, Sumitomo's actions      manipulated the prices in the cash markets, including in the United      States cash market. As noted earlier, these manipulative effects on      prices in interstate commerce were direct, and any knowledgeable      participant in copper trading would know they would result from      Sumitomo�s conduct, since they flowed from the well-established and      well-known pricing relationships between the LME and the U.S. markets.      These effects were certainly readily foreseeable and apparent, and      Sumitomo knew, through its agent or agents, that this conduct would cause      injury in those markets.    

       Sumitomo�s conduct, therefore, satisfies all of the requisite      elements of the offense of price manipulation.    

       IV.    

       In the course of the Commission's investigation of this matter,      Sumitomo�s management has provided substantial cooperation to the      Commission in important respects. The company fully informed and      cooperated with the Commission and other international regulatory      authorities, including Japanese authorities, in connection with      Sumitomo�s public revelation in June 1996 of its large positions and      related losses in the copper market. At the Commission staff�s      request, the company announced its intention to stand behind contracts      that were traded by the U.S. copper merchant, and the company ultimately      reported a significant cost associated with the unwinding of those      contracts. The company also provided the Commission voluntarily with      certain important information during the course of the investigation. It      might have been difficult, if not impossible, for the Commission      otherwise to obtain at least some of this information, particularly      taking into account that Sumitomo is a foreign corporation.    

       The Commission also recognizes that the company has suffered significant      losses in the wake of the collapse of the scheme underlying this action      and that it faces continued exposure in private litigation. It has      reported losses of $2.6 billion as a result of the matters discussed in      this Order. Finally, Sumitomo's copper trader has stated that he took      certain steps to hide aspects of his conduct from other company officials      and the Commission notes that there have been indications that he may      have personally profited from his conduct. Sumitomo has sued him in Japan      for purportedly transferring millions of dollars that properly belonged      to the company.    

       On the other hand, the conduct described above imposed enormous costs on      traders, manufacturers, retailers and consumers of copper. The Commission      believes that the conduct described in this Order was part of a course of      conduct that extended over a much longer period of time.    

       Even acknowledging Sumitomo's copper trader's acts of deception,      the Commission agrees with the Japanese court that stated, in the course      of sentencing Sumitomo's copper trader to an eight year term of      imprisonment, that Sumitomo's internal monitoring systems were      inadequate, that "the company developed no effective system for      controlling the action of the dealing team," and that "such      system was one cause for this case." Company officials overlooked      signs of the copper trader�s misconduct. Various warnings from      information in the marketplace and from Sumitomo's copper      trader's actions of which company officials were aware provided      Sumitomo with the opportunity to address Sumitomo's copper      trader's actions. It did not heed those warnings or address those      actions. As the Japanese court put it, "Sumitomo just considered the      amount of profit that [Sumitomo's copper trader] showed, and trusted      [Sumitomo's copper trader] too much, and left an insufficient      monitoring system, and allowed [Sumitomo's copper trader] to be in      his position for a long time, and thus it can be said that Sumitomo just      sought profit too single-mindedly, and did not take care of the control      for [sic] risk management. Sumitomo's responsibility is not      small."    

       The Commission has taken all of these factors into account in its      decision to accept Sumitomo�s Offer of Settlement, which it believes      strikes an appropriate balance among these considerations. The civil      monetary penalty imposed on Sumitomo approximates the extent of      Sumitomo's gains as a result of the manipulative scheme. Considering      the breadth and impact of the conduct in question, that is appropriate.      At the same time, the civil monetary penalty is significantly less than      what the statute would provide if the matter were litigated to a      successful conclusion. See 7 U.S.C. �� 9, 13(b)      (providing for a civil monetary penalty of not more than the higher of      $100,000 per violation or triple the monetary gain from the violation).      The mitigating factors as well as the benefits to the Commission of      resolving this matter prior to filing and the lengthy proceeding that      would thereafter ensue justify this result.    

       V.    

       FINDINGS OF VIOLATIONS    

       Based on the foregoing, the Commission finds that Sumitomo violated      Sections 6(c), 6(d) and 9(a)(2) of the Act, as amended, 7 U.S.C. �      9, 13(b) and 13(a)(2).    

       VI.    

       OFFER OF SETTLEMENT    

       Sumitomo has submitted an Offer of Settlement in which, without      admitting or denying the allegations or the findings herein, it:      acknowledges service of the Order; admits jurisdiction of the Commission      with respect to the matters set forth in this Order and for any action or      proceeding brought or authorized by the Commission based upon violations      or for enforcement of the Order; waives service of a complaint and notice      of hearing, a hearing, all post-hearing procedures, judicial review by      any court, any objection to the staff�s participation in the      Commission�s consideration of the Offer, any claim of double      jeopardy based on the institution of this proceeding or the entry of any      order imposing a civil monetary penalty or other relief, and all claims      which it may possess under the Equal Access to Justice Act, 5 U.S.C.      �504 (1994) and 28 U.S.C. �2412 (1994), as amended by Pub. L.      No. 104-21, ��231-32, 110 Stat. 847, and Part 148 of the      Commission�s Regulations, 17 C.F.R. ��148.1 *et      seq*., relating to, or arising from, this action; stipulates that the      record basis on which this Order is entered consists solely of this      Order, including the findings in this Order; and consents to the      Commission�s issuance of this Order, in which the Commission makes      findings, including findings that Sumitomo violated ��6(c),      6(d), and 9(a)(2) of the Act, and orders that Sumitomo cease and desist      from violating the provisions of the Act it has been found to have      violated, that it pay a civil monetary penalty of one hundred twenty-five      million dollars ($125,000,000) within twenty (20) business days of the      entry of this Order, that it pay an additional twenty-five million      dollars ($25,000,000) into escrow within twenty (20) business days of      entry of this Order, to be paid either as restitution of damages      proximately caused by virtue of the conduct underlying the violations      found in the Order, in the manner set forth in this Order, or as part of      the civil monetary penalty, also in the manner set forth in this Order,      and that it comply with its undertakings.    

       VII.    

       ORDER    

       Accordingly, IT IS HEREBY ORDERED THAT:    

         1. Sumitomo shall cease and desist from violating �� 6(c),        6(d) and 9(a)(2) of the Act;      

         2. Sumitomo shall pay of a total amount of One Hundred Fifty Million        Dollars ($150,000,000USD), consisting of:      

    -           One Hundred Twenty-Five Million Dollars ($125,000,000USD) as a civil          monetary penalty, pursuant to Section 6(c) of the Act, which shall be          paid in accordance with the terms of paragraph 3, below; and        
    -           Twenty-Five Million Dollars ($25,000,000USD), which may be used          within the time limitations and in accordance with the procedures set          forth in paragraph 4 below, solely to pay restitution of damages          (including where characterized as damages) pursuant to Section 6(c)          of the Act, determined or alleged to be proximately caused to private          claimants by virtue of the conduct underlying the violations found in          the Order and, for those same claimants only, by virtue of similar          conduct occurring at other times prior to June 30, 1996; and after          the expiration of those time limitations, any remaining part of the          Twenty-Five Million Dollars ($25,000,000USD) shall become part of the          civil monetary penalty pursuant to Section 6(c) of the Act, in          accordance with the terms of paragraph 4, below.        

         3. Sumitomo shall deposit the civil monetary penalty of One Hundred        Twenty-Five Million Dollars ($125,000,000USD) by electronic funds        transfer to the account of the Commission at the United States        Department of the Treasury within twenty (20) business days of entry of        this Order. Such payment shall be made in a manner authorized by the        Commission and in accordance with United States Treasury regulations        and shall be accompanied by a letter that identifies Sumitomo and the        name of this proceeding. A copy of the cover letter and proof of        payment to the United States Treasury shall be simultaneously        transmitted to the Director of the Division of Enforcement (the        "Division") of the Commission (the "Director").      

         4. Sumitomo shall deposit the remaining Twenty-Five Million Dollars        ($25,000,000USD) (together with any interest thereon, the "Escrow        Funds"), within twenty (20) business days of the entry of the        Order, into an insured escrow account (the "Escrow Account")        established at Citibank, N.A. ("the Escrow Agent"), which        shall serve as escrow agent over the Escrow Funds, and which may        appoint the law firm of Shutts & Bowen, LLP, Miami, Florida, shall        serve as administrator thereof (the "Administrator") to        fulfill the obligations of paragraph 4b, and they which shall follow        the instructions set forth below:      

           a. The Escrow Funds shall be invested in the CitiFunds U.S. Treasury          Reserves Money Market Account, which is a fund fully backed by          short-term U.S. Treasury obligations.        

           b. The Administrator shall take all necessary steps to enable the          Escrow Funds to be a taxable "settlement fund," within the          meaning of Internal Revenue Code �468B and regulations          thereunder, including the filing of the elections and statements          contemplated by those provisions. The Administrator shall file all          necessary federal, state and local tax returns for the Escrow Funds          and shall pay any appropriate taxes as a "qualified settlement          fund," within the meaning of Treasury Regulations 1.468B-12, et          seq., 26 C.F.R. 1.468B-12 et seq., from the Escrow Funds.        

           c. As used in this Order:        

             (1) a "Covered Action" is a lawsuit against Sumitomo            and/or its officers, directors, employees or subsidiaries            (collectively, the "Sumitomo Defendants") by one or more            private claimants in the courts of the United States or of any            state of the United States that seeks recovery from the Sumitomo            Defendants for losses or injuries that the claimant(s) allege were            caused in whole or in part by activities of the Sumitomo Defendants            or their agents during a period which includes some or all of the            period from June 1, 1995 to May 31, 1996, that affected (a) the            price of copper in (i) a cash market, (ii) a futures market, (iii)            an options market; and/or (b) the price of any product containing            copper. Without limiting the foregoing, each of the following            pending actions is deemed a Covered Action for the purposes of this            Offer: (1) In re Sumitomo Copper Litigation, 96 Civ. 4584            (MP), and Polansky v. Sumitomo Corporation of America, et            al., 97 Civ. 5372 (MP), pending in the United States District            Court for the Southern District of New York; and (2) Heliotrope            General, Inc. v. Sumitomo Corporation, et al., Case No.            007011679, and R.W. Strang Mechanical v. Sumitomo            Corporation, et al., Case No. 007011680, pending in the            Superior Court of the State of California for the County of San            Diego (together referred to as the "Pending Class            Actions").          

             (2) The "Effective Period" shall be the period that ends            four (4) years from the date of entry of the Order, provided,            however, that such period shall be tolled for a Covered Action, as            defined below, during the period after that a Settlement Agreement            in that Covered Action has been executed and before the entry of a            final, non-appealable order disapproving, overturning, setting            aside or otherwise nullifying a Settlement Agreementis in effect;          

             (3) A "Settlement Agreement" is an agreement, including            in the form of an agreed-to proposed order or stipulation, in a            Covered Action that (1) resolves (or, if approved by a court, will            resolve) some or all claims against one or more of the Sumitomo            Defendants; and (2) if court approval of the agreement, proposed            order or stipulation is required by Fed. R. Civ. P. 23(e) or any            analogous state statute, provides that any amounts paid to a            Covered Action Fund (as defined below) from the Escrow Account            shall revert to the Escrow Account if and when a final,            non-appealable judgment or order is entered disapproving,            overturning, setting aside or otherwise nullifying the settlement            agreement.          

             (4) A "Covered Action Fund" is an escrow or            court-administered fund established for the benefit of the private            claimants pursuant to a Settlement Agreement.          

             (5) A "Final Disposition" is a final, non-appealable            judgment or order that finally disposes of a Covered Action with            respect to one or more Sumitomo Defendants.          

           d. The Escrow Agent shall make, at Sumitomo�s written request,          a payment for the purposes specified in Section 2b, above, required          to be made by Sumitomo pursuant to a Settlement Agreement or Final          Disposition made or entered within the Effective Period, no later          than ten (10) days after satisfaction of all of the following          conditions, to the persons, entities or accounts set forth in the          Settlement Agreement or Final Disposition, in an amount equal to the          lesser of (i) the amount requested by Sumitomo; or (ii) the remaining          Escrow Funds (after payment of all fees to the Escrow Agent and          Administrator pursuant to paragraph 4h below, and taxes or reserves          therefor, as specified in paragraph 4b above):        

         (1) the private action is a Covered Action;      

             (2) if the action is not one of the Pending Class Actions, a copy            of the pleadings has been provided to the Escrow Agent;          

             (3) if the payment is pursuant to a Final Disposition, the            judgment with proof of entry by the court has been provided to the            Escrow Agent;          

             (4) if the payment is to a Covered Action Fund pursuant to a            Settlement Agreement in a class action (including, but not limited            to, the Pending Class Actions), the Settlement Agreement (and a            copy of the relevant escrow agreement, if applicable) in connection            with the Covered Action Fund has been provided to the Escrow Agent.            Upon the entry of a Final Disposition in such matter, Sumitomo            shall advise the Escrow Agent of the Final Disposition in such            matter and shall provide a copy of such Final Disposition and proof            of entry to the Escrow Agent; and          

             (5) the payment has been approved by the Commission as consistent            with the terms of its Order, and the Commission has informed the            Escrow Agent in writing of its approval.          

           e. Sumitomo shall submit to the Division a copy of any request to          make any payment from the Escrow Funds (other than a payment pursuant          to paragraph 4h) along with any supporting documentation, on or          before the date Sumitomo submits such request and documentation to          the Escrow Agent. Sumitomo shall provide additional information          reasonably requested by the Division as needed for the Commission to          determine if it should approve the payment as consistent with the          terms of the Order. The Escrow Agent shall not make any requested          payment until it receives the Commission�s written approval. If          the requested payment is consistent with the terms of the Order, the          Commission shall, within thirty (30) days of the request, give its          written approval to the Escrow Agent or state in writing its denial          of approval and the reasons for its denial.        

           f. In no event shall any funds paid pursuant to the Order be paid          to, directly or indirectly, any current or former officer, director          or employee of Sumitomo or any other defendant in any Covered Action.        

           g. The Escrow Funds shall be applied only to pay damages to private          claimants but shall not be applied for the payment of attorneys�          fees or expenses or any other costs incurred in connection with any          aspect of a Covered Action other than as provided in paragraph 4h. To          the extent that the amount of the judgment or settlement of a          relevant action is used as the basis of setting attorneys� fees          or expenses in a Covered Action, that amount shall not include any          part of the Escrow Funds. The court with jurisdiction over the          Covered Action shall be expressly informed by Sumitomo of the          requirements of this paragraph prior to the court�s          consideration of any application for attorneys� fees or expenses          or payment of any other costs for which Covered Action Funds are to          be used.        

           h. The Escrow Agent and Administrator shall be entitled to payment          from the Escrow Funds for all reasonable fees and expenses in          connection with establishment, maintenance and termination of the          Escrow Account. Such payments shall have priority over payments to          claimants pursuant to paragraph 4d, above.        

           i. The Escrow Agent shall provide monthly reports to the Commission          and Respondent which: set forth details of the disbursement of any          funds from the Escrow Account; itemize the amount of interest accrued          on the account; and itemize allowable expenses paid to the Escrow          Agent in connection with the account.        

           j. Any Escrow Funds not distributed in accordance with the terms of          paragraphs 4b, 4d and 4h, above, upon the expiration of the Effective          Period, and any funds refunded to the Escrow Account after the          expiration of the Effective Period, shall be deemed a civil monetary          penalty pursuant to �6(c) of the Act and shall be paid          immediately by the Escrow Agent to the United States Treasury. Such          payments shall be made in the manner described in paragraph 3, above.        

           k. The Escrow Account shall remain open until all of the Escrow          Funds have been paid pursuant to paragraphs 4b, 4d, 4h and 4j, and,          in the event that a payment has been made to a Covered Action Account          Fund, there shall have been a Final Disposition. At such time, the          Escrow Agent shall terminate the Escrow Fund and shall make a final          report pursuant to paragraph 4i.        

           l. Insofar as any part of this paragraph 4 calls for signed and/or          written notification(s), authorization(s) or communication(s), a fax          transmission shall be a satisfactory means of providing such          notification(s), authorization(s) or communication(s).        

         5. Sumitomo shall comply with the following undertakings:      

           a. To cooperate fully with the Commission and its staff in any          investigation, civil litigation or administrative proceeding related          to this proceeding, by, among other things, upon the          Commission�s reasonable request and subject to any legally          cognizable privileges, (1) providing the Commission�s staff with          access, for inspection and copying, to documents within the          possession, custody or control of Sumitomo or any of its          subsidiaries; and (b) actively seeking the cooperation of any          Sumitomo officer, director or employee for interviews, depositions or          testimony. Any such request will be made upon Sumitomo�s          counsel, Martin London and Bruce Birenboim of the law firm of Paul,          Weiss, Rifkind, Wharton and Garrison. Should Sumitomo seek to change          the designated person to receive such requests, notice shall be given          to the Commission of such intention 14 days before it occurs. Any          person designated to receive such requests shall be located in the          United States.        

           b. Not to take any action or make any public statement denying,          directly or indirectly, any statement in this Order or creating, or          tending to create, the impression that the Order is without a factual          basis; provided, however, that nothing in this provision affects          Sumitomo�s testimonial obligations, or its right to take factual          or legal positions relating to any proceeding to which the Commission          is not a party. Sumitomo will undertake all steps necessary to assure          that all of its agents, attorneys and employees understand and comply          with this agreement.        

       By the Commission.    

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       ______________________________    

       Jean A. Webb    

       Secretary to the Commodity    

       Futures Trading Commisson    

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       Date:__________________    

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