CFTC v. David Smothermon (mismarking, 2019)

Alleged — pending

These are allegations. CFTC has filed an action; nothing in it has been proven, and the respondents have not been found liable. Everything described on this page is what the regulator alleges, not what a court has found. See our editorial policy.

✓ Checked against the primary document on October 3, 2026. The library's summary, tags and figures for this record were compared with the regulator's own document by an AI model (Claude) following written instructions, with sampled and disputed records read a second time. No lawyer has reviewed them. A checked record can still contain errors, and checked does not mean endorsed. See how we check records or report a correction.

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In May 2019 the CFTC sued David Smothermon, president and head trader of a commodities company's gas division, alleging that from about December 2015 to September 2016 he falsely inflated the mark-to-market value of the division's futures and physical natural gas book to hide losses that grew past $100 million. The CFTC seeks restitution, disgorgement, penalties, trading bans and an injunction; the claims were unproven.

The record

What was ordered

Civil penalty

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Disgorgement

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Prejudgment interest

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Total relief

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Alleged gain

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A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars.

What is alleged to have happened

The Commodity Futures Trading Commission announced this action on May 9, 2019 as release 7926-19, filing a complaint in the U.S. District Court for the Southern District of New York. The defendant is David Smothermon of Houston, Texas (1 individual, 0 entities). Earlier versions of this record listed him only as a former natural gas head trader.

The complaint alleges that, as president and head trader of his employer's gas division, Smothermon engaged in a multifaceted scheme to inflate the reported mark-to-market profit and loss of the division's trading book. He allegedly caused false entries in the company's recordkeeping system to exaggerate the value of NYMEX futures and of physical natural gas trades, mismarked daily futures values, and directed employees to change the terms and values of physical trades, disguising mounting trading losses that ultimately cost the company over $100 million in realised losses.

The CFTC seeks restitution, disgorgement, civil penalties, trading bans and a permanent injunction. Those are requested remedies, not imposed ones, so no bar or money is recorded, and the allegations remain unproven. The release thanks the U.S. Attorney's Office for assistance but does not describe a criminal case.

For the regulator's own account of the facts, read the primary document linked above.

What technique is this, and how does it work?

This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.

• Mismarking — see how it works, what statute it engages, and every other action tagged the same way.

Timeline

1. 2019-05-09 CFTC release published

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• CFTC release

The linked release is a work of the United States government and is not subject to copyright. Our summary and narrative above are our own writing.

Related actions

Other actions in the library sharing at least one technique tag with this one.

Record added September 20, 2026. If this matter has since resolved, been withdrawn or been dismissed, we want to know: submit a correction.