April 22, 2010

CFTC Charges Carmine Garofalo with Illegal Trading on a U.S. Exchange

Garofalo also charged with options fraud.

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that it charged Carmine Garofalo, an Italian citizen, with options fraud, engaging in fictitious transactions and trading noncompetitively in violation of the Commodity Exchange Act and CFTC regulations. Garofalo has never been registered with the CFTC.

On April 20, 2010, the same day the complaint was filed in the U.S. District Court for the Northern District of Illinois, the Honorable Ronald Guzman entered a restraining order freezing certain of the defendant's assets and prohibiting him from destroying documents and denying CFTC staff access to books and records. The court has scheduled a hearing for April 29, 2010, on the CFTC’s motion for a preliminary injunction.

The CFTC complaint alleges that on March 5, 2010, Garofalo engaged in a series of unlawful commodity options transactions involving E-mini S&P 500 and Euro/U.S. Dollar European Style Premium option contracts on the Chicago Mercantile Exchange (CME). Garofalo allegedly fraudulently accessed an account of a Luxemborg-based investment fund and, without permission, executed trades to the investment fund’s detriment. Through this allegedly unlawful scheme, Garofalo repeatedly made non-competitive, fictitious trades between his personal account and an account of the investment fund. As a result, Garofalo’s personal account profited by more than $614,000 through the illegal scheme, while the investment fund’s account lost a corresponding amount, according to the CFTC complaint.

The CFTC thanks the CME Group, Inc., the parent of the CME, and Interactive Brokers, LLC for their assistance.

In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains, restitution, civil monetary penalties, trading and registration bans and a permanent injunction against further violations of the federal commodities laws.

The following CFTC Division of Enforcement staff members are responsible for this matter: Elizabeth Padgett, Allison Shealy, JonMarc Buffa, George Malas, Jennifer Smiley, John Dunfee, Joseph Konizeski, Paul Hayeck and Joan Manley.

Media Contacts
Scott Schneider
202-418-5174

Dennis Holden
202-418-5088

Last Updated: April 22, 2010