Release: 4552-01
For Release: August 16, 2001

CFTC SETTLES FRAUD ACTION AGAINST COMEX FLOOR BROKER VINCENT COPPOLA

WASHINGTON – The Commodity Futures Trading Commission (CFTC) today issued an order settling an enforcement action against Vincent Coppola of West Caldwell, New Jersey, a CFTC-registered floor broker and a dual trading member of the Commodity Exchange, Inc. (COMEX), a New York Mercantile Exchange division.

The CFTC order finds that, from September 27, 1999, through October 5, 1999, Coppola fraudulently executed trades in the gold options ring of the COMEX. Without admitting or denying the order’s findings, Coppola consented to the entry of the order, which resolves the CFTC administrative proceeding filed on January 10, 2001 (see CFTC News Release 4487-01, January 10, 2001).

CFTC Order Finds That Coppola Traded Ahead of Customer Orders

Specifically, the order, entered on August 15, 2001, finds that from September 27, 1999 through October 8, 1999, gold trading volume and volatility increased on the COMEX. Furthermore, on September 28, 1999, gold futures and options contracts traded in record volumes for both number of contracts and trades and gold options brokers received an unprecedented number of mostly small-lot retail customer orders.

The order finds that Coppola traded ahead of executable customer gold options orders for his own benefit on seven occasions, and that, at the time Coppola traded for his personal account, he held executable customer orders in the same options in which he traded personally. The order additional finds that Coppola knowingly or recklessly disregarded the fact that he held executable customer orders at the times that he traded at better prices for himself. Moreover, on four occasions, the order finds, Coppola changed prices on executed customer gold options orders to the detriment of the opposite broker’s customers and to the financial benefit of his personal account, or the account of a broker trading for his own account opposite the customer order or that of another COMEX member.

Additionally, according to the order, on six occasions, Coppola aided and abetted another broker’s price change of a customer order, which financially benefited Coppola at the broker’s customer’s expense. The order also finds that Coppola failed to record required trading information on his trading cards.

CFTC Suspends Coppola’s Floor Broker Registration, Imposes Cease and Desist Order, Trading Ban and Dual Trading Prohibitions, and Orders Restitution and Civil Monetary Penalties

The CFTC order finds that Coppola violated sections 4c(a)(A) and (B), 4c(b) and 4g(a) of the Commodity Exchange Act (CEA), 7 U.S.C. �� 6c(a) and (b) and 6g(a), and sections 1.35(d), 1.38 and 33.10 of the Commission’s regulations, and the order:

• directs Coppola to cease and desist from further violations of the CEA and CFTC regulations;
• requires Coppola to pay restitution in the amount of $7,700;
• imposes a civil monetary penalty on Coppola of $30,000, payable pursuant to a payment plan;
• suspends Coppola’s floor broker registration for a period of six months, but allows him to trade off the floor for his own account after the first three months of this period;
• prohibits Coppola from dual trading for one year after the registration suspension period; and,
• restricts his registration for two years after the registration suspension, and requires him to have a sponsor if he acts as a floor broker or floor trader.

Previous CFTC Order Entered in This Matter

On January 10, 2001, the CFTC instituted enforcement actions in this matter against four COMEX floor brokers: Paul Merolla of Ridgewood, New Jersey; Philip Selby of Passaic, New Jersey; Timothy Murphy of New Rochelle, New York; and Coppola. Specifically, the CFTC filed and simultaneously settled an administrative action against Merolla and Selby, and filed a separate administrative complaint against Murphy and Coppola. On April 30, 2001, the CFTC settled the administrative action against Murphy (see CFTC News Release 4512-01, April 30, 2001). All of the brokers were dual traders who traded for their own accounts and for customers.

CFTC orders found, among other things, that on several days, particularly September 28, 1999, Merolla, Murphy, and Selby engaged in fraud by trading ahead of executable customer gold option orders and changing prices on executed trades to the detriment of their customers. Merolla, Murphy, and Selby consented to the entry of the CFTC order without admitting or denying the findings made in the order.

CASE CONTACT:
Lenel Hickson
Deputy Regional Counsel (Eastern Regional Office)
CFTC Division of Enforcement
(212) 488-1250
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