Release: 4566-01
For Release: September 4, 2001

IOWA COMMODITIES SPECULATOR SETTLES GOVERNMENT CHARGES

CFTC Bans Frederick Mersch From Trading For Two Years For False Reporting and Exceeding Trading Limits on Frozen Pork Belly Futures

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today the issuance of an order accepting an offer of settlement from Frederic J. Mersch of Sioux City, Iowa, in connection with a complaint filed by the CFTC, charging him with exceeding speculative trading limits for pork belly futures, filing false reports, and failing to update an inaccurate report. (See CFTC News Release 4471-00, November 7, 2000).

The CFTC order finds that at various times during the period of August 2, 1996, through March 31, 1999, Mersch traded his own account and controlled the trading in other accounts carried in the names of his wife, adult children, and other acquaintances. According to the order, when aggregated, futures positions in these accounts exceeded the trading limits for frozen pork belly futures at the Chicago Mercantile Exchange (CME) on one day in August 1996 and four days in March 1998.

The order further finds that Mersch filed two false reports with the Commission that failed to disclose, as required, that he controlled the family and acquaintance accounts and held at least a 10 percent financial interest in the accounts. Mersch also failed to update one of his inaccurate reports and held or controlled reportable positions on at least 160 trading days while the report remained inaccurate, according to the order.

Among other sanctions, the order:

• directs Mersch to cease and desist from further violations of the Commodity Exchange Act and CFTC Regulations;
• requires Mersch to pay a $25,000 civil monetary penalty;
• prohibits Mersch from trading commodity futures and options on futures for two years; and
• requires him to comply with certain undertakings, including (1) to not fund any other person’s or entity’s commodity trading during the two-year trading prohibition; and (2) after the trading ban is lifted, to obtain written authorization before trading for entering commodity orders for others, and to give a written authorization to anyone entering orders for his personal commodity trading accounts.

In consenting to the order, Mersch neither admitted nor denied the findings in the order.

A copy of the CFTC order may be found at http://www.cftc.gov/

Case Contact
Scott Williamson
Acting Regional Counsel
Central Regional Office
Division of Enforcement
(312) 886-3090

# # #