Fraud Charges Filed Against Futures Traders
Federal regulators Friday filed fraud charges against nearly a dozen futures traders at two New York exchanges, saying they mishandled customers’ orders and engaged in fictitious trades.
The civil charges stemmed from two sets of investigations and were filed by the Commodity Futures Trading Commission, the regulator for the nation’s futures markets.
Commodity traders said the charges came in the wake of a probe that started more than three years ago.
The traders, who spoke on condition of anonymity, said the charges could be brought against a larger “clique” of traders.
The investigation already has led to lawsuits against 24 individuals and six trading firms on three of the New York’s futures exchanges.
So far, a total of 11 individuals and trading firms have settled the charges, while other defendants are challenging the allegations in court.
One suit filed Friday was against four sugar brokers on the Coffee, Sugar & Cocoa Exchange.
It was the first time the probe has targeted traders on the Coffee, Sugar & Cocoa Exchange, the city’s third-largest futures market. Previous cases involved traders at the New York Mercantile Exchange and the Commodity Exchange.
At the same time, charges stemming from a separate probe were filed against six oil traders and two brokerage houses on the NYMEX.
The CFTC charged the sugar brokers with fraud in the handling of customer accounts. It said they violated the Commodity Exchange Act in connection with 67 trades in sugar futures between June and October, 1988, and during March, 1990.
The sugar brokers named in the complaint were Stephen Reddy, Nicholas DeSalvo, John Sorkvist and Gary Bergamo.
In the case against the petroleum traders, the federal agency cited 130 instances in which “wash” and fictitious sales were allegedly made and 202 occasions in which traders illegally took the opposite side of customer orders.
The agency said the trades occurred in crude oil, heating oil and unleaded gasoline futures.
The petroleum traders were Solomon Mayer, Barry Mayer, Steven Gelbstein, Robert Halper, Edmond Mekertichian, Isaac Mayer and two New York brokerage houses, SHB Commodities Inc. and Maye Commodities.
The New York Mercantile Exchange said it had no immediate comment on the CFTC allegations.
