Commodities Panel Acknowledges That It Helped FBI Probe
The Commodity Futures Trading Commission acknowledged for the first time today that it has worked with the FBI from the beginning of an investigation into fraud at the nation’s two largest futures exchanges.
The federal commission regulates the commodities markets, as the Securities and Exchange Commission monitors the stock and bond markets.
CFTC spokeswoman Kate Hathaway declined to provide specifics of the commission’s role in investigating allegations of profit skimming from investors but said a statement will be issued after the markets close today.
Meanwhile, commodities traders were reported scrambling for attorneys as federal authorities continued the investigation into trading practices at the Chicago Board of Trade and the Chicago Mercantile Exchange.
Panic in Trading Circles
The investigation centers on allegations that as many as 100 brokers and traders systematically cheated customers out of millions of dollars.
The undercover sting operation became public Thursday when federal agents began serving traders, brokerage firms and the exchanges with subpoenas. The result was panic in many trading circles.
The Chicago Tribune reported Sunday that the FBI launched the investigation after a complaint by Archer Daniels Midland Co., a Decatur-based grain-processing company, of possible violations.
Former U.S. Atty. Dan Webb, now a lawyer in private practice, said he returned to his office Thursday night after a day in court to find 10 messages from traders seeking a lawyer.
Some traders are probable defendants. Others may be concerned about the prospect of civil lawsuits from investors who have lost money in the futures markets and seek to blame their losses on corrupt trading practices.
Lawyers interviewed by the Tribune said the most likely defenses would involve the fidelity of government tape-recordings secretly made on noisy exchange floors, and questioning whether the FBI has the expertise to spot crime in the futures business.
U.S. Atty. Gen. Dick Thornburgh indicated Sunday in Washington that authorities are preparing to present evidence to a grand jury.
“Obviously, I can’t discuss in detail what’s a pending investigation,” Thornburgh said on NBC-TV’s “Meet the Press.” “But the investigation is far-reaching, it is significant. . . . We will be gathering and submitting evidence to see if violations of the federal criminal laws have occurred.”
In the two-year investigation, FBI agents posing as traders recorded conversations that suggested some trades were rigged to prevent customers from getting fair-market prices, and that some brokers sent false reports to customers to hide the skimming of profits or overcharges on commissions, the Tribune and the Chicago Sun-Times have said.
Commodities exchanges are marketplaces in which buyers and sellers essentially bet millions of dollars on the future prices of goods ranging from gold to pork bellies.
