Fraites

The Commodity Futures Trading Commission ("Commission") has reason to believe that Joseph L. Fraites ("Fraites"), Michael R. Martin ("Martin"), Mark H. Mueller ("Mueller"), and Alfred J. Zamojcin ("Zamojcin") (collectively, "Respondents") aided and abetted, pursuant to Section 13(a) of the Act, 7�U.S.C. ��13c(a) (1994), violations by a registered futures commission merchant ("FCM") of Section 4g of the Commodity Exchange Act, as amended ("Act"), 7 U.S.C. ��6g (1994), and Commission Regulation ("Regulation") 1.35(a-1)(1), 17 C.F.R. ��1.35(a-1)(1) (1999). Therefore, the Commission deems it appropriate and in the public interest that public administrative proceedings be, and they hereby are, instituted to determine whether Respondents engaged in the violations set forth herein, and to determine whether any order should be issued imposing remedial sanctions.

In anticipation of the institution of an administrative proceeding, each of the Respondents has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Without admitting or denying any of the findings of fact in this Order, each of the Respondents acknowledges service of this Order Instituting Proceedings Pursuant to Sections 6(c) and 6(d) of the Commodity Exchange Act, Making Findings and Imposing Remedial Sanctions ("Order"). Each of the Respondents consents to the use of the findings in this Order in this proceeding and in any other proceeding brought by the Commission or to which the Commission is a party.¹

From at least June 1995 through February 1997, Fraites, Martin, Mueller, and Zamojcin were all employed by a futures commission merchant ("FCM") as associated persons ("APs"). During that period, the Respondents received and accepted orders for certain customer accounts of the FCM and did not obtain account identification at the time many of those orders were received. Respondents knew that, under Commission regulations, specific account identification was required to be recorded immediately upon receipt of a customer order.

Respondents aided and abetted the FCM's violation of Section 4g of the Act and Regulation 1.35(a-1)(1) by failing to obtain and record account identification on office order tickets at the time orders were received, by recording account identification on office order tickets after the order was already received and executed without such identification, and by preparing order tickets for trades that had already been executed. ²

From at least June 1995 through February 1997, the Respondents worked as APs at an FCM's New York office. They worked on the FCM's "coffee desk" where they principally handled institutional clients who traded coffee futures contracts and options on futures contracts.

Among the accounts handled by the Respondents were two corporate accounts and two individual accounts, for all of which the owner of one of the individual accounts ("the trader") placed the orders. Fraites, who ran the 'coffee desk,' Martin and Mueller accepted the orders from the trader. The trader frequently failed to provide account identification at the time he placed orders with them, and Fraites, Martin and Mueller frequently accepted orders from the trader without obtaining account identification at the time the orders were received.

After receiving each order, Fraites, Martin and Mueller prepared a written record of the order ("office order ticket"), and frequently failed to record the account identification on the office order ticket immediately upon receipt of such order. Instead, upon receipt of the order, they indicated on the office order ticket that the order had been placed by the trader. They did not indicate the specific customer account for which the order had been placed. Some time after the order was filled, and oftentimes after the close of trading, the trader provided the account identification for the executed trades to one of the Respondents, generally Zamojcin, who then recorded the account identification on the partially prepared office order ticket.

On occasion, one of the Respondents, generally Zamojcin, split a trade into two accounts by reducing the number of contracts on the original office order ticket and preparing a second office order ticket to reflect the number of contracts from the original office order ticket that were allocated to another account.

Respondents knew that account identification was required to be placed immediately on all order tickets before the orders could be executed. Nevertheless, the trader frequently did not give, and Fraites, Martin and Mueller frequently did not immediately obtain, account identification for the orders placed by the trader. Although Zamojcin did not himself routinely accept orders from the trader, he knew that Fraites, Martin and Mueller had accepted orders from the trader without obtaining the account identification and he frequently added the account identifications after the orders were executed.

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 recordkeeping duties are imposed directly on FCMs, "APs. . . play a vital day-to-day role in the recordkeeping systems maintained by FCMs. Indeed, 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." In re Shahrokh Nikkhah, 2000 WL 622872 at *10 (CFTC May 12, 2000).

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.

Respondents, as Commission registrants and as FCM employees, did not properly and completely prepare the written records of customer orders required of an FCM by Regulation 1.35(a-1)(1). Respondents each knew that specific account identification was required to be recorded on an office order ticket immediately upon receipt of the order from the customer. Fraites, Martin, and Mueller, however, frequently accepted orders from the trader without obtaining account identification. Zamojcin, and occasionally one or more of the other Respondents, received the account identification for executed trades from the trader at the end of the day and added the account identification to the office order tickets. Zamojcin also prepared office order tickets afterwards to reflect trades which had already been executed without account identification. As a result of the Respondents' conduct as the FCM's employees, the FCM violated Section 4g of the Act and Regulation 1.35(a-1)(1). The Respondents thus aided and abetted the FCM's violations.

Each of the Respondents has submitted an Offer of Settlement in which he neither admits nor denies the findings in this Order. Subject to the foregoing, each Respondent: acknowledges service of this Order and admits the jurisdiction of the Commission with respect to the matters set forth herein; waives: (1) the service and filing of a complaint and notice of hearing; (2) a hearing and 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 they 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 proceeding; 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.

Each of the Respondents stipulates that the record basis on which this Order is entered consists of the Order and the findings to which he has consented in his Offer, which are incorporated in this Order. Each of the Respondents consents to the Commission's issuance of this Order, which makes findings as set forth herein, and orders each Respondent to cease and desist from violating the provisions of the Act and the Regulations he is found to have violated; orders that Fraites pay a civil monetary penalty of $15,000, that Martin pay a civil monetary penalty of $10,000 and that Mueller and Zamojcin each pay a civil monetary penalty of $5,000; orders the Respondents to comply with their respective undertakings as set forth in the Offers and this Order; and places conditions on Fraites activities for a period of two years, and Martin, Mueller and Zamojcin for a period of one year, following the entry of this Order.

Solely on the basis of the consents evidenced by the Offers, and prior to any adjudication on the merits, the Commission finds that each of the Respondents aided and abetted violations of Section 4g of the Act and Regulation 1.35(a-1)(1) pursuant to Section 13(a) of the Act.

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

B. Fraites shall pay a civil monetary penalty in the amount of fifteen thousand dollars ($15,000) within ten (10) days of the date of this Order. Martin shall pay a civil monetary penalty in the amount of ten thousand dollars ($10,000) within ten (10) days of the date of this Order. Mueller and Zamojcin each shall pay a civil monetary penalty in the amount of five thousand dollars ($5,000) within ten (10) days of the date of this Order. Each Respondent 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, Division of Trading and Markets, Commodity Futures Trading Commission, 1155 21^st Street, NW, 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, NW, Washington D.C. 20581. In accordance with Section 6(e)(2) of the Act, 7 U.S.C. � 9a(2) (1994), if any Respondent fails to pay the full amount of this penalty within fifteen (15) days of the due date, he shall be automatically prohibited from trading on all contract markets and, if he or she is registered with the Commission, such registration shall be automatically suspended until he shows to the satisfaction of the Commission that payment of the full amount of the penalty imposed against him with interest thereon to the date of payment has been made;

C. Each Respondent shall comply with his undertakings, as set forth in his Offer:

1. Not to take any action or make any public statement denying, directly or indirectly, any finding in this Order, or creating, or tending to create, the impression that this Order is without a factual basis; provided, however, that nothing in this provision affects his: (i) testimonial obligations; or (ii) right to take legal positions in other proceedings to which the Commission is not a party;

2. Fraites, for the two year period beginning on the date of the entry of this Order, and Martin, Mueller and Zamojcin, each for the one year period beginning on the date of the entry of this Order, will not:

a. serve on any disciplinary committee, arbitration panel, oversight panel or governing board of any self-regulatory organization registered or subject to regulation by the Commission;

b. directly or indirectly act as a principal, partner, officer, or branch office manager of any entity registered or required to be registered with the Commission;

c. directly or indirectly act in any supervisory capacity over anyone registered or required to be registered with the Commission or over any person, whether required to be registered with the Commission or not, involved in the writing, receipt, or transmission of orders, and/or the completion or processing of order tickets, for futures contracts or options on futures contracts, other than for the Respondents' own accounts; and

d. act in any capacity, whether registration with the Commission is required or not, which involves the writing, receipt, or transmission of orders, and/or the completion or processing of order tickets, for futures contracts or options on futures contracts, other than for the Respondents' own accounts, unless these activities are subject to a Supplemental Sponsor Certification Statement in the form attached hereto, executed and submitted to the Commission by a qualified sponsor. Immediately upon the sponsor's ceasing to act as Respondent's sponsor, Respondent shall cease acting as an associated person and shall stop acting in any capacity which involves the writing, receipt, or transmission of orders, and/or the completion or processing of order tickets, for futures contracts or options on futures contracts, other than for the Respondent's own account, until he once again obtains a Supplemental Sponsor Certification Statement in the form attached hereto, executed and submitted to the Commission by a qualified sponsor.

D. Respondents Mueller and Zamojcin shall comply with their undertaking, as set forth in their Offers, to cooperate fully with the Division of Enforcement ("Division") in this proceeding by, among other things: 1) responding promptly, completely, and truthfully to any inquiries or requests for information; 2) providing authentication of documents; 3) testifying completely and truthfully; and 4) not asserting privileges under the Fifth Amendment of the United States Constitution.

_____________________________________________________
	)
In the Matter of:	)	CFTC Docket No: 00-26
	)
�� Joseph Lawrence Fraites	)
�� 41 Hemlock Ridge	)
�� Weston, CT 06883,	)
	)
�� Michael Richard Martin	)	ORDER INSTITUTING PROCEEDINGS
�� 23 Alexis Lane	)	PURSUANT TO SECTIONS 6(c)
�� Edison, NJ 08820,	)	AND 6(d) OF THE COMMODITY
	)	EXCHANGE ACT, MAKING FINDINGS
�� Mark Hugo Mueller	)	AND IMPOSING REMEDIAL
�� 10 Western Avenue	)	SANCTIONS
�� Morristown, NJ 07960,	)
	)
�� -and-	)
	)
�� Alfred John Zamojcin	)
�� 110 Charles Street	)
�� Floral Park, NY 11001,	)
	)
Respondents.	)
_____________________________________________________	)

		By the Commission.
Dated: August 7, 2000		______________________
		Edward W. Colbert
		Deputy Secretary of the Commission
		Commodity Futures Trading Commission