Release #3905-96
For Release: April 18, 1996
CFTC FILES ADMINISTRATIVE ACTION AGAINST THREE CME FLOOR BROKERS, ALLEGING FRAUDULENT TRADE PRACTICE ABUSES IN THE LIVE CATTLE FUTURES PIT
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) today announced the filing of a five-count administrative complaint against Ronald M. Schiller of Highland Park, Illinois, a floor broker in the live cattle futures pit at the Chicago Mercantile Exchange (CME), and two other CME live cattle floor brokers:
Eugene J. Chesrow, Jr., and Emmett J. Whealan, both of Chicago.
The CFTC complaint alleges that during a 20-month period from November 1991 through June 1993, Schiller engaged in a variety of illegal trading practices, which violated the Commodity Exchange Act and/or CFTC regulations, including:
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(1) cheating and defrauding customers by appropriating favorable trades executed on behalf of his customers into his personal account, allocating unfavorable trades from his personal account into his customer accounts, and changing prices and quantities on trades he made on behalf of customers -- all of which are alleged to have been detrimental to his customers;
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(2) indirectly "bucketing" customer orders;
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(3) indirectly filling opposing buy and sell customer orders by "offset"; and
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(4) engaging in various other forms of noncompetitive trading practices.
Furthermore, the CFTC complaint alleges that Chesrow and Whealan willfully entered into noncompetitive trades with Schiller that permitted Schiller to accomplish the unlawful trades. The complaint charges Chesrow and Whealan with entering into illegal accommodation trades; engaging in noncompetitive trading; and with willfully aiding and abetting Schiller's violations.
The complaint also alleges that Schiller, Chesrow, and Whealan violated the Act and CFTC regulations in that the information they endorsed on their respective trading cards and orders to record the execution of their purchases and sales of cattle futures contracts inaccurately identified, failed to identify, or misrepresented information required by the CME and the CFTC. As a result, the respondents allegedly subverted the audit trail of trading activity that is relied upon by the markets, the CME, and the Commission to ensure that trading activity is lawful.
A public hearing has been ordered to determine whether the allegations in the complaint are true. Sanctions that could be imposed against the respondents in the case include: suspension or revocation of respondents' registrations, cease and desist orders, imposition of civil monetary penalties of up to $100,000 or triple the monetary gain against each respondent for each violation, and restitution to injured customers.
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