Chicago Futures Firm Settles CFTC Charges
WASHINGTON (AP) _ Refco Inc., a Chicago futures brokerage, settled administrative charges Wednesday of improper record-keeping and broker supervision and agreed to pay a $220,000 fine.
The Commodity Futures Trading Commission announced that Refco settled - without admitting or denying wrongdoing - a seven-count administrative complaint at the same time it was issued.
In addition to the $220,000 civil penalty, Refco agreed to review its procedures for overseeing trading personnel and to submit a written report to the CFTC with 120 days.
Also named in the complaint was Ray E. Friedman, of Palm Beach, Fla., a Refco principal and registered floor broker at the Chicago Mercantile Exchange, who did not settle the charges.
In an unrelated matter, the CFTC launched an administrative complaint against an Oak Brook, Ill., soybean trader who pleaded guilty to improper trading practices after he was indicted last year in an FBI undercover operation at the Chicago Board of Trade.
The complaint against Refco alleged that for a year beginning in June 1988, Friedman, in ″an express or implied agreement or understanding″ with a Refco customer, violated Merc limits on how many open contracts in pork belly futures could be traded by one person who is speculating rather than hedging.
A speculator trades commodity futures to profit from anticipating price movements while a hedger tries to minimize risk by taking offsetting positions in the cash and futures markets.
Refco also was charged with not maintaining written records of Friedman’s records, failing to supervise him properly and violating two previous orders by the CFTC to maintain better records and supervision.
″We intend to enforce exchange speculator limits and we also intend to enforce cease and desist orders,″ said Dennis Klejna, the CFTC’s director of enforcement. Friedman’s attorney was not in his office when called for comment.
While Refco has settled, the administrative action continues against Friedman to determine if the allegations are true and if so, what sanctions to take.
In the other action, the CFTC accused Craig LaCrosse of non-competitive trading by helping another broker enter a false record of a customer order and by phony sales.
He was one of 45 traders at the CBOT and Merc indicted on fraud-related charges last year. Last August LaCrosse, who pleaded guilty to two criminal counts, admitted accepting an illegal pre-arranged trade.