Tuesday, December 14, 2010

Bart Chilton On Trial

Saturday, I called out Bart Chilton for disclosing non-public information about market positions in silver and called for his immediate resignation. I wrote:

On December 8, CFTC Commissioner Bart Chilton spoke before the High Frequency Trading World USA 2010 Conference in New York. During the speech he made this comment:

We saw very large concentrations of trader positions in 2008. That has continued. Since then, we saw one trader hold more than 20 percent of the crude oil market. Even earlier this year, one trader held over 40 percent of the silver market.
I have no sympathy for JPM, at all, they are part of the bankster elite.  However, for CFTC Commissioner Chilton to discuss the size of a given position, it is way out of bounds. Now that his comment is out in the open, it will put a huge bullseye on silver shorts, because of the prevailing belief that the 40% futures position is on the short side. Thus, Chilton has given the longs "privileged information", or he will at a minimum drive the market as though that is the correct interpretation of the information, and it will create major problems for silver shorts, big and small...
Chilton's disclosures, given that he is a CFTC commissioner, and he received this privileged information because he is a commissioner, are way out of bounds. He should resign immediately.
Chilton responded:
I’m not in the habit of responding to errors or suggesting factual corrections, but your piece from today struck me as grossly inaccurate and unfair. In my speech, I gave no specific trader name nor position. It is the name of a trader that is privileged under the law. I am very careful to never divulge that information. I didn’t even give a time period (although I was clear that it isn’t currently) in which the position was held. That information, by the way, is publically-available at CFTC.gov as part of our Commitment of Traders (COT) report. The information (the 40%) was also discussed in a public hearing on metals position limits in March and has been discussed in many blogs and newsletters from that time period. We, the CFTC, always show the four largest longs and the four largest shorts in our COT, and we don’t list the names.
Thinking I has made an error and not wanting to have incorrect information out there about Chilton, I immediately published his email and rescinded my demand for him to resign, but I did warn:
But since our paths have crossed, I'll be keeping a closer eye on your public comments, and when I deem it relevant to my readers, I'll comment, be it positive or negative, on your views.
So I started digging and took a look at those CFTC Commitment of Traders reports, and what I found was that never, never is the position of just one trade divulged, for silver traders the positions are listed for the top four traders combined, but never just the top trader. Take a look for yourself.

Thus, my original charge appears to hold, Chilton in his speech gave out non-public information or made an error, which is causing a nightmare for JPMorgan.

Notice in his email, the bold section that I have highlighted. He is referring to his speech where he identifies a single trader, which is either the disclosure of non-public information or the failure to properly interpret the COT report. In either case, he is still causing the nightmare for JPMorgan.
Now, before going public with this latest information, I checked with Chilton to see if there was some other possible explanation. I emailed him the following:

Hi Bart,

I am just trying to get a clarification. Somewhat randomly, I pulled a
CFTC Commitment report from May which indicates that 47.5% of open
interest is held by 4 or less traders, but it doesn't seem to indicate
that this is just one trader. Where would I find on the Commitment
report that it was just one trader, if it was such during this time
period? Or am I looking at the wrong time frame and there is an
indication somewhere else that one trader held a short position of over


Thanks for your help on this.

His first response:
I'll get back, traveling today and only on bberry.
His second response:
I'm sorry for not getting you a detailed response. I looked briefily and saw one COT where a single trader had 35% of the market, but I can't spend more time on it just now. This is not OTC and it was single trader, March I think is where I found the 35%, but it has been 40%. Very sorry I'm so jammed.
I reply to him:
Hi Bart,

Do you want me to go in my next post with you don't have time? And
that you don't have a ready reference for the statement you made in
your speech last week?

And BTW where exactly did you see the COT report where there was a
single trader who had 35% of the market?

Thanks for your help on this,

He responds
I can't do research for folks. Wish I had time. Sorry.
So there you have it, I contend Bart is blowing an awful lot of smoke here. That it is unlikely he has public back up for the statement he originally made in his speech and that now he is in the cover up phase, and we all know it's the cover-up phase that finally gets you. I reinstate my call for Bart Chilton to resign immediately as a Commissioner of the CFTC.


  1. Chilton responds to Wenzel:

    "The information (the 40%) was also discussed in a public hearing on metals position limits in March and has been discussed in many blogs and newsletters from that time period."


    “Value Regulations” - Remarks of Commissioner Bart Chilton to Metals Market Investors, Washington, D.C., March 23, 2010


    "There has been some back and forth recently about whether an individual trader holds 20 or 40 percent of a given market. Either level is too high in my opinion, but the bottom line is that there is currently no limit during the majority of the trading period. An individual trader could have 60 percent—more than a majority—of a market and not be in violation of the law or our regulations."


    The public meeting referenced by Chilton to Wenzel was held two days after the above speech, on March 25, 2010. I did not find any reference to a 40% concentration by a single trader on the CFTC's website covering the meeting, though it's possible I missed it.

    What's important is that when Chilton wrote to Wenzel, "The information (the 40%) was also discussed in a public hearing", he used the passive voice and did not take ownership of the statement. Anyone could have been involved in that discussion.

    In striking contrast, his revelation on December 8 was that, "Even earlier this year, one trader held over 40 percent of the silver market." Chilton owns this statement, and the CFTC may own it as well.

  2. First you thought it worth your time to get in a pissing match with Denninger, and now you're making comments about JPM's silver short being non-public information?

    Anybody following the COMEX silver market knows that the JPM short is the proverbial elephant in the room. I suggest you read the many writings of Ted Butler who has covered this for years. You may also look up the whistle blower Andrew Maguire who exposed the silver market manipulation of JPM.

    The silver market is so tiny the banks can paint the tape whichever way they want. They're achilles heel is the physical market, and at some point they will not be able to supply all the silver standing for delivery -the exchange will default.

    Bart Chilton is trying to clean up the Futures exchange, and make them a credible place for price discovery. Ensuring the integrity of the futures markets is his primary duty as a commissioner of the CFTC.