-- UPDATE 1-Seven COMEX gold brokers settle with CFTC --
(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.
((Alden Bentley, New York Commodity Desk, 646 223 6041,
nyc.commods.newsroom@reuters.com))
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12-Dec-2002 18:10:33 GMT
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