UPDATE 1-Seven COMEX gold brokers settle with CFTC
Thu December 12, 2002 01:11 PM ET
(Adds details, exchange comment)
NEW YORK, Dec 12 (Reuters) - Seven gold brokers at the COMEX metals trading arm of the New York Mercantile Exchange have settled allegations of fraud and noncompetitive trading dating back to late 1999, the Commodity Futures and Trading Commission said Thursday.
There was no admission of guilt by the brokers, who were fined and accepted restrictions on their floor trading activities.
In an order posted on its Web site (http://www.cftc.gov) on Thursday, the CFTC said it settled enforcement actions with Henry Chandler and Ernest Penny over allegations they fraudulently executed gold options trades for customers from Sept. 27 to Oct. 5, 1999, a period of extreme market movement when the price of gold spiked about $70 to $338 an ounce.
It said Michael Hammer, Robert Ferraioli, Tacho Sandoval William Wosnack and Stephen Seelenfreund allegedly executed trades noncompetitively on Sept. 27 and Sept. 28, 1999, including falsely recording executions as having occurred during the one-minute closing period, when they actually occurred after the close of trade.
Reuters was unable to obtain comments from the brokers, with several having unlisted telephone numbers and the remainder not returning phone calls.
Other alleged violations of the Commodity Exchange Act and CFTC regulations included entering trades as if they had been competitively executed on Sept. 27, though they were actually executed on Sept. 28, and violating record-keeping rules.
The NYMEX cooperated with the the CFTC, the Web site said.
"We always support any government agency and any investigation and, obviously, want to maintain the highest standards of integrity in our market," a NYMEX spokeswoman told Reuters.
The CFTC suspended Chandler's and Penny's floor broker registrations and imposed trading bans for six months, imposed a $20,000 civil penalty on each and required them to pay restitution of $1,200 and $7,060, respectively.
They will not be able to conduct dual trading for their personal accounts and customers for one year after the registration suspension period. However, they may trade off the COMEX floor for their own accounts after three months.
The other five were prohibited from dual trading for one year and a $20,000 civil penalty was imposed on Sandoval, and a $15,000 penalty on Ferraioli, Hammer, Seelenfreund and Wosnack.
All seven were ordered to cease and desist from further violations. |
