Release: #4580-01 (Docket No. 02-02)
For Release: October 31, 2001

NEW YORK TRADER SUED FOR DEFRAUDING EMPLOYER

CFTC Files and Settles Action against Robert Ryan and
Permanently Bans Him from Futures Trading and Fines Him $40,000

NEW YORK -- The United States Commodity Futures Trading Commission (CFTC) announced today the filing and simultaneous settlement of a proceeding against Robert Ryan of Staten Island, New York. The CFTC issued an order finding that Ryan, a trader employed by a private company, fraudulently allocated futures trades -- originally placed and executed on behalf of his employer -- to his personal trading account. This practice ensured Ryan a risk-free personal profit.

According to the order, Ryan carried out his allocation scheme over a two-month period in 1997 by executing a give-up agreement directing trades placed by Ryan on behalf of his employer to an alternative account. Ryan fraudulently represented this alternative account as his employer’s account when, in fact, it was Ryan’s personal trading account, the order finds.

Specifically, the order finds that, between August 11 and October 1, 1997, Ryan placed trades on behalf of his employer for either U.S. Bonds or 5-year Treasury note futures contracts. According to the order, he subsequently allocated the trades, after the market had moved favorably, by placing offsetting trades in his personal account and then instructing a futures commission merchant to give up the best-priced contracts to his personal account – wholly pursuant to the give-up agreement. In this manner, Ryan was able to capture, risk-free, the unrealized gain on his employer’s positions. The order finds that Ryan breached his fiduciary duties to his employer.

Among other sanctions, the order:

• directs Ryan to cease and desist from violating anti-fraud provisions of the Commodity Exchange Act;
• requires Ryan to pay a forty thousand dollar ($40,000) civil monetary penalty;
• permanently prohibits Ryan from trading on or subject to the rules of any registered entity; and
• orders Ryan to comply with certain undertakings, including never seeking registration with the CFTC in any capacity.

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

A copy of the CFTC order can be found at www.cftc.gov.

Enforcement Case Media Contact:
Charles J. Sgro, CFTC Eastern Regional Office
(917) 225-2165

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