Eagleton Quits Merc, Says It Favors Insiders

Former Sen. Thomas F. Eagleton resigned from the Chicago Mercantile Exchange’s board Tuesday with a vitriolic letter that denounced the Merc’s self-regulatory program and what he said were official efforts to protect a former Merc chairman from punishment.

Eagleton attacked top Merc officials’ efforts on behalf of prominent trader Brian Monieson, 53, who is accused of failing to stop traders at a firm he heads after he was warned that they were cheating customers. When the Commodity Futures Trading Commission scheduled a hearing on its plan to ban Monieson from trading, several senior Merc and futures industry officials asked to testify as character witnesses.

Eagleton said that, from this year’s futures trading scandal to the recent Monieson case, “I have grown increasingly dissatisfied with the way the Chicago Mercantile Exchange handles decisions relating to the public interest.” Whether a decision relates to trading procedures “or penalties for thievery . . . or, most recently, the Brian Monieson matter, the Merc decision is usually a non-Lincolnian decision of insiders by insiders and for insiders,” Eagleton wrote.

The resignation of Eagleton, who was Democratic vice presidential nominee in 1972, is likely to further fuel the controversy over the handling of the Monieson case. The outcry has also come at a time when many outsiders are calling for more aggressive regulation of Chicago’s booming futures markets.

Eagleton said the Merc’s investigations department six times had fined or warned Monieson’s firm, GNP Commodities, and that Monieson himself was fined $10,000 in 1986.

“In Mercdom, an attack on one insider is an attack on all insiders,” Eagleton wrote. “All of the Merc power has been brought into action to save Monieson’s neck.” He said Merc founder Leo Melamed, U.S. Agriculture Secretary and former Merc President Clayton K. Yeutter and Robert Wilmouth, chairman of the National Futures Organization, “a supposedly ‘regulatory’ organization,” had asked to speak for Monieson at a CFTC hearing set for Monday. Also, Eagleton said, the Merc’s principal outside attorney, Jerrold Salzman, had gotten special permission to represent Monieson.

“As I see it, the Merc has intruded into the legitimate enforcement affairs of the CFTC . . . and against the public interest,” Eagleton wrote.

Eagleton, a member of the huge futures exchange’s board of governors for three years, has increasingly opposed Merc officials over how to police the industry and limit the stock market volatility that some believe is worsened by stock-index futures trading.

In a telephone interview from his office in St. Louis, Eagleton said he had made clear his views on the Monieson case at a stormy meeting of the Merc’s board of governors last Wednesday. He had asked that the Merc officials and Salzman not take part in the hearing but had been rebuffed by all others on the board.

Eagleton said that he did not have pronounced differences with industry officials until this year but that “my temperature began to rise quickly after January,” when the FBI’s undercover investigation of trading floor cheating was disclosed. “I began to see more and more that was needed,” Eagleton said.