UNITED STATES OF AMERICA
Before the
COMMODITY FUTURES TRADING COMMISSION

I.

On September 30, 1999, the Commodity Futures Trading Commission ("Commission") filed a Complaint and Notice of Hearing ("Complaint") against Constantine Mitsopoulos, Margaret Dull, Lisa Budicak, and Richard Marisie. Count Three of the Complaint charges that Budicak directly violated Section 4g of the Commodity Exchange Act, as amended ("Act"), 7�U.S.C. ��6g (1994), and Commission Regulation ("Regulation") 1.35(a-1)(2), 17�C.F.R. ��1.35(a-1)(2) (1999), and aided and abetted Refco, Inc.'s ("Refco") violations of Section 4g of the Act and Regulation 1.35(a-1)(1) and (2), 17�C.F.R. ��1.35(a-1)(1) and (2) (1999), pursuant to Section 13(a) of the Act, 7�U.S.C. ��13c(a) (1994).

II.

In order to dispose of the allegations and issues raised in the Complaint as to her, Respondent Budicak has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Without admitting or denying any of the allegations of the Complaint or the findings herein, Budicak acknowledges service of this Order Making Findings and Imposing Remedial Sanctions ("Order"). Budicak consents to the use of the findings contained in this Order in this proceeding and in any other proceeding brought by the Commission or to which the Commission is a party.¹

III.

The Commission finds that:

A. SUMMARY

This matter arises out of a fraudulent trade allocation scheme perpetrated by Capital Insight Brokerage, Inc. ("Capital Insight"), a broker/dealer and registered introducing broker, and its owner, President, and associated person, S. Jay Goldinger ("Goldinger").² From at least January 1994 to December 1995, Goldinger traded for his customers through Refco, a futures commission merchant ("FCM"). Goldinger fraudulently allocated trades among his customers, based upon the trades' profitability, by, among other things, delaying the assignment of customer account numbers until after trades had been executed, and by causing Refco employees to change account numbers for executed trades in order to transfer executed trades between customer accounts.³

From at least January 1994 to December 1995, Budicak wrote orders placed by Goldinger for Refco's customer accounts and did not obtain account identification at the time many of the orders were received. Budicak was a registered floor broker and therefore directly violated Section 4g of the Act and Regulation 1.35(a-1)(2). She also aided and abetted Refco's violations of Section 4g of the Act and Regulation 1.35(a-1)(1) and (2) by failing to obtain account identification at the time she received orders, by filling in account identification on orders already executed without such identification, and by changing the account identification on orders already executed.

B. RESPONDENT

Lisa Budicak, who resides in Chicago, Illinois, was registered with the Commission as a floor broker from January 1994 to July 1995, pursuant to Sections 4e and 4f of the Act, 7�U.S.C. ���6e, 6f. Budicak was employed by Refco from 1984 to March 1996, including acting as a floor manager for a couple of years. Budicak was a member of the Chicago Board of Trade, a contract market, for at least part of the time in 1994 and 1995.

C. FACTS

From at least January 1994 through December 1995, Goldinger had discretionary authority over approximately seventy customer futures accounts traded through Refco. Goldinger telephoned in thousands of Treasury bond ("T-bond") futures and options on T-bond futures trades for these customer accounts to the phone clerks working at a Refco T-bond desk on the floor of the Chicago Board of Trade ("Refco Desk"). Handling Goldinger's T-bond futures and options orders constituted the substantial majority of the phone clerks' work at the Refco Desk.

As a Commission registrant and member of a contract market, Budicak knew that account identification was required to be placed immediately on all order tickets before the orders could be executed. Nevertheless, Goldinger did not immediately give, and Budicak did not immediately obtain, account identification for those T-bond futures and options trades for which she took the orders from Goldinger. In addition, Goldinger did not immediately give account identification for many of the thousands of T-bond futures and options orders for his customers which he placed with other Refco Desk phone clerks and for which Budicak prepared the order tickets, and Budicak did not cause the other Refco Desk phone clerks to immediately obtain account identification for those orders from Goldinger.

After the T-bond futures and options orders were executed without account identification, Goldinger allocated profitable and losing trades among his customers by providing Budicak and the other Refco Desk phone clerks with the account numbers for the executed trades. At Goldinger's request, Budicak and the other Refco Desk phone clerks also changed account identification on trades already assigned to an account.

D. VIOLATIONS OF THE ACT AND COMMISSION REGULATIONS

1. Direct record-keeping violations

Section 4g of the Act requires that FCMs, introducing brokers, floor brokers, and floor traders make and produce records relating to their customers' transactions and positions as required by the Commission. Regulation 1.35(a-1)(2) requires members of contract markets to prepare a written record of a customer order immediately upon receipt on the floor of an exchange, including the customer account identification and order number, while Regulation 1.35(a-1)(1) requires FCMs and introducing brokers to do the same. Failing to place account identification on order tickets immediately upon receipt of orders "provide[s] an opportunity to direct profitable fills to favored accounts." In re GNP Commodities, Inc. [1990-1992 Transfer Binder] Comm. Fut. L. Rep. (CCH) �25,360, at 39,214 (CFTC August 11, 1992), aff'd sub nom. Monieson v. CFTC, 996 F.2d 852 (7th Cir. 1993).

As a Commission registrant and member of a contract market, Budicak was responsible under the Act and its Regulations for properly preparing customer order tickets. As set forth above, despite the fact that she knew that account identification was required to be recorded on all orders before the orders could be executed, Budicak, while a Commission registrant and member of a contract market, wrote many of the orders placed by Goldinger without obtaining or requiring account identification. Because she failed to write account identification on most of the floor order tickets immediately upon receipt of the orders from Goldinger, Budicak directly violated Section 4g of the Act and Regulation 1.35(a-1)(2).

2. Aiding and Abetting Refco's record-keeping violations

As previously discussed, Section 4g of the Act requires that FCMs, among others, make and produce records relating to their customers' transactions and positions as required by the Commission. Regulation 1.35(a-1)(1) requires FCMs, among others, to prepare a written record of a customer order immediately upon receipt, including the customer account identification and order number. Although these record keeping duties are imposed directly on FCMs, FCM employees "play a vital day-to-day role in the record keeping systems maintained by FCMs." In re Shahrokh Nikkhah [Current Transfer Binder] Comm. Fut. L. Rep. (CCH) �28,129 at 49,887-49,888 (CFTC May 12, 2000), 2000 WL 622872 at *10. In Nikkhah, the Commission noted that associated persons ("APs") "are often delegated their employing FCM's responsibility for preparing the `written record' of customers orders required by Rule 1.35(a-1). Such delegation does not impose a direct regulatory obligation on the AP. It does, however, create an opportunity for APs ... to aid and abet an FCM's failure to meet its regulatory responsibilities." Id. at 49,888. Budicak and the other Refco Desk phone clerks were similarly delegated Refco's recordkeeping obligations, creating the same opportunity for them to aid and abet the FCM's failure to meet its regulatory responsibilities.

Liability as an aider and abettor requires proof that (1) the Act was violated, (2) the named respondent had knowledge of the wrongdoing underlying the violation, and (3) the named respondent intentionally assisted the primary wrongdoer. Id. at fn. 28.

Budicak, as a Commission registrant and as an FCM employee, did not properly and completely prepare the written records of customer orders required of an FCM by Regulation 1.35(a-1)(1). She knew that specific account identification was required to be recorded on an office order ticket immediately upon receipt of the order from the customer; however, she accepted orders from Goldinger without obtaining account identification. Budicak also knowingly prepared, on a routine basis, order tickets for the orders Goldinger placed through other Refco Desk phone clerks without obtaining or requiring account identification. Budicak also routinely caused account numbers to be changed for orders previously executed and for which Goldinger had already supplied account numbers. As a result of Budicak's conduct, Refco violated Section 4g of the Act and Regulation 1.35(a-1)(1). Budicak thus aided and abetted Refco's violations.

IV.

OFFER OF SETTLEMENT

Budicak has submitted an Offer of Settlement in which she neither admits nor denies the allegations of the Complaint or the findings herein. Subject to the foregoing, Budicak: acknowledges service of the Complaint and this Order and admits the jurisdiction of the Commission with respect to the matters set forth in the Complaint and this Order; waives: (1) a hearing; (2) all post-hearing procedures; (3) judicial review by any court; (4) any objection to the staff's participation in the Commission's consideration of the Offers; (5) all claims which she may possess under the Equal Access to Justice Act, 5�U.S.C. ��504 (1994) and 28�U.S.C. ��2412 (1994), as amended by Pub. L. No. 104-121, ���231-32, 110 Stat. 862-63, and Part 148 of the Regulations, 17�C.F.R. ���148.1, et seq., relating to or arising from this action; and (6) any claim of Double Jeopardy based upon the institution of this proceeding or the entry in this proceeding of any order imposing a civil monetary penalty or any other relief. Budicak stipulates that the record basis on which this Order is entered consists of the Complaint, this Order and the findings to which she has consented in her Offer, which are incorporated in this Order. Budicak consents to the Commission's issuance of this Order, which makes findings as set forth herein, and orders Budicak to cease and desist from violating the provisions of the Act and the Regulations she is found to have violated; orders that Budicak shall pay a civil monetary penalty of twenty thousand dollars ($20,000); orders Budicak to comply with her undertakings as set forth in the Offer and this Order; and places conditions on her registration, if any, for a period of four years following the date of the entry of this Order.

V.

FINDINGS OF VIOLATIONS

Solely on the basis of the consent evidenced by the Offer, and prior to any adjudication on the merits, the Commission finds that Budicak violated Section 4g of the Act, and Regulation 1.35(a-1)(2), and aided and abetted violations of Section 4g of the Act and Regulation 1.35(a-1)(1) and 1.35(a-1)(2) pursuant to Section 13(a) of the Act.

VI.

ORDER

Accordingly, IT IS HEREBY ORDERED THAT:

A. Budicak shall cease and desist from violating Section 4g of the Act, and Regulation 1.35(a-1)(1) and 1.35(a-1)(2);

B. Budicak shall pay a civil monetary penalty in the amount of twenty thousand dollars ($20,000) within ten (10) days of the date of this Order. Budicak shall make such payment by U.S. postal money order, certified check, bank cashier's check, or bank money order, made payable to the Commodity Futures Trading Commission, and addressed to Dennese Posey, or her successor, Division of Trading and Markets, Commodity Futures Trading Commission, 1155 21^st Street, N.W., Washington D.C. 20581 under cover of a letter that identifies the Respondent and the name and docket number of the proceeding. A copy of the cover letter and the form of payment shall be simultaneously transmitted to Director, Division of Enforcement, Commodity Futures Trading Commission at the following address: 1155 21st Street, N.W., Washington D.C. 20581. In accordance with Section 6(e)(2) of the Act, 7�U.S.C. ��9a(2) (1994), if Budicak fails to pay the full amount of this penalty within fifteen (15) days of the due date, she shall be automatically prohibited from trading on all contract markets until she shows to the satisfaction of the Commission that payment of the full amount of the penalty imposed against her with interest thereon to the date of payment has been made;

C. For the four year period beginning on the date of the entry of this Order, her registration with the Commission, if any, shall be subject to the following conditions:

D. Budicak shall comply with her undertakings, as set forth in her Offer:

The provisions of this Order shall be effective on this date.

NOTES:

1 Budicak does not consent to the use of the Offer or this Order, or the findings to which she has consented in the Offer, as the sole basis for any other proceeding brought by the Commission other than a proceeding brought to enforce the terms of this Order. Nor does she consent to the use of the Offer or this Order by any other person or entity in this or any other proceeding. The findings to which she has consented in the Offer, as contained in this Order, are not binding on any other person or entity named as a respondent or defendant in this or in any other proceeding.

2 On November 12, 1999, the federal district court for the Central District of Los Angeles entered an "Order of Permanent Injunction and Other Equitable Relief" against Goldinger and Capital Insight, ordering them to disgorge $6,000,000 in ill-gotten gains and enjoining them from, inter alia, violating the Act and acting in any capacity for which registration with the Commission is required under the Act. On December 13, 1999, Goldinger pleaded guilty in federal district court to wire fraud for running the fraudulent allocation scheme.

3 On May 24, 1999, the Commission issued an order instituting proceedings, making findings and imposing remedial sanctions against Refco, finding that in connection with Goldinger's scheme, Refco violated Section 4g of the Act and Regulations 1.35(a-1)(1) and 166.3 (CFTC docket #99-12). Refco neither admitted nor denied the findings. On April 10, 2000, the Commission issued an Order making findings and imposing remedial sanctions against Margaret Dull and Richard Marisie, finding that in connection with Goldinger's scheme, Dull and Marisie violated Section 4g of the Act and Regulation 1.35(a-1)(2), and aided and abetted Refco's record-keeping violations. Dull and Marisie neither admitted nor denied the findings (CFTC docket #99-17). On August 31, 2000, the Commission issued an Order making findings and imposing remedial sanctions against Constantine Mitsopoulos, finding that in connection with Goldinger's scheme, Mitsopoulos violated Section 4g of the Act and Regulations 1.35(a-1)(2) and 166.3, and aided and abetted Refco's record-keeping violations. Mitsopoulos neither admitted nor denied the findings (CFTC docket #99-17).