UNITED STATES OF AMERICA

Before the

COMMODITY FUTURES TRADING COMMISSION

_________________________________________________
)
In the Matter of: ) CFTC Docket No. 99-17
)
CONSTANTINE MITSOPOULOS, ) ORDER MAKING FINDINGS AND
et al., ) IMPOSING REMEDIAL SANCTIONS AS
) TO RESPONDENTS MARGARET DULL

Respondents.

) AND RICHARD MARISIE
_________________________________________________ )

I.

On September 30, 1999, the Commodity Futures Trading Commission ("Commission") filed a Complaint and Notice of Hearing ("Complaint") against Constantine Mitsopoulos, Margaret Dull, Lisa Budicak, and Richard Marisie. Count Three of the Complaint charges that Dull and Marisie directly violated Section 4g of the Commodity Exchange Act, as amended ("Act"), 7 U.S.C. 6g (1994), and Commission Regulation ("Regulation") 1.35(a-1)(2), 17 C.F.R. 1.35(a-1)(2) (1999), and aided and abetted Refco, Inc.'s ("Refco") violations of Section 4g of the Act and Regulation 1.35(a-1)(1) and (2), 17 C.F.R. 1.35(a-1)(1) and (2) (1999), pursuant to Section 13(a) of the Act, 7U.S.C. 13c(a) (1994).

II.

In order to dispose of the allegations and issues raised in the Complaint as to them, Respondents Dull and Marisie have submitted Offers of Settlement ("Offers") which the Commission has determined to accept. Without admitting or denying any of the allegations of the Complaint or the findings herein, Dull and Marisie acknowledge service of this Order Making Findings and Imposing Remedial Sanctions ("Order"). Dull and Marisie consent to the use of the findings contained in this Order in this proceeding and in any other proceeding brought by the Commission or to which the Commission is a party.1

III.

The Commission finds that:

A. SUMMARY

This matter arises out of a fraudulent trade allocation scheme perpetrated by Capital Insight Brokerage, Inc. ("Capital Insight"), a broker/dealer and registered introducing broker, and its owner, President, and associated person, S. Jay Goldinger ("Goldinger").2 From at least January 1994 to December 1995, Goldinger traded for his customers through Refco, a futures commission merchant ("FCM"). Goldinger fraudulently allocated trades among his customers, based upon the trades' profitability, by, among other things, delaying the assignment of customer account numbers until after trades had been executed, and by causing Refco employees to change account numbers for executed trades in order to transfer executed trades between customer accounts.

From at least January 1994 to December 1995, Dull and Marisie accepted orders from Goldinger for Refco's customer accounts and did not obtain account identification at the time many of the orders were received. Dull and Marisie were registered floor brokers and therefore directly violated Section 4g of the Act and Regulation 1.35(a-1)(2). They also aided and abetted Refco's violations of Section 4g of the Act and Regulation 1.35(a-1)(1) and (2) by failing to obtain account identification at the time they received orders, by filling in account identification on orders already executed without such identification, and by changing the account identification on orders already executed.

B. RESPONDENTS

1. Margaret Dull, who resides in Flossmoor, Illinois, was registered with the Commission as a floor broker from November 1993 to June 1995, pursuant to Sections 4e and 4f of the Act, 7 U.S.C. 6e, 6f. Dull was employed by Refco as a phone clerk from August 1990 to May 1996. Dull was a member of the Chicago Board of Trade, a contract market, for at least part of the time in 1994 and 1995.

2. Richard Marisie, who resides in Inverness, Illinois, has been registered with the Commission as a floor broker since February 1987, pursuant to Sections 4e and 4f of the Act, 7 U.S.C. 6e, 6f. Marisie was employed by Refco as a phone clerk from 1983 to October 1996. Marisie was a member of the Chicago Board of Trade, a contract market, for at least part of the time in 1994 and 1995.

C. FACTS

From at least January 1994 through December 1995, Goldinger had discretionary authority over approximately seventy customer futures accounts traded through Refco. Goldinger telephoned in thousands of Treasury bond ("T-bond") futures and options on T-bond futures trades for these customer accounts to Dull and Marisie, who were working as phone clerks at a Refco T-bond desk on the floor of the Chicago Board of Trade ("Refco Desk"). Handling Goldinger's T-bond futures and options orders constituted the substantial majority of Dull's and Marisie's work at Refco.

Dull was primarily responsible for taking Goldinger's orders during the day trading session. Dull frequently spoke with Goldinger each day, taking the orders and giving him market information. Dull sometimes told Marisie what order Goldinger was placing so that he could write up the orders for her. Marisie also occasionally received orders from Goldinger directly.

As Commission registrants and members of a contract market, Dull and Marisie knew that account identification was required to be placed immediately on all order tickets before the orders could be executed. Nevertheless, Goldinger did not immediately give, and Dull and Marisie did not immediately obtain, account identification for many of the thousands of T-bond futures and options orders for Goldinger's customers.

After the T-bond futures and options orders were executed without account identification, Goldinger allocated profitable and losing trades among his customers by providing Dull and/or Marisie with the account numbers for the executed trades, including orders originally taken by other phone clerks working at the Refco Desk. At Goldinger's request, Dull and/or Marisie also changed account identification on trades already assigned to an account.

D. VIOLATIONS OF THE ACT AND COMMISSION REGULATIONS

1. Direct record-keeping violations

Section 4g of the Act requires that FCMs, introducing brokers, floor brokers, and floor traders make and produce records relating to their customers' transactions and positions as required by the Commission. Regulation 1.35(a-1)(2) requires members of contract markets to prepare a written record of a customer order immediately upon receipt on the floor of an exchange, including the customer account identification and order number, while Regulation 1.35(a-1)(1) requires FCMs and introducing brokers to do the same. Failing to place account identification on order tickets immediately upon receipt of orders "provide[s] an opportunity to direct profitable fills to favored accounts." In re GNP Commodities, Inc. [1990-1992 Transfer Binder] Comm. Fut. L. Rep. (CCH) 25,360, at 39,214 (CFTC August 11, 1992), aff'd sub nom. Monieson v. CFTC, 996 F.2d 852 (7th Cir. 1993).

As Commission registrants and members of a contract market, Dull and Marisie were responsible under the Act and its Regulations for properly preparing customer order tickets. As set forth above, despite the fact that they knew that account identification was required to be recorded on all orders before the orders could be executed, Dull and Marisie, while Commission registrants and members of a contract market, accepted many orders from Goldinger without obtaining account identification. Because they failed to write account identification on many of the floor order tickets immediately upon receipt of the orders from Goldinger, Dull and Marisie directly violated Section 4g of the Act and Regulation 1.35(a-1)(2).

2. Aiding and Abetting Refco's record-keeping violations

In order to "aid" or "abet" a violation of the Act or Regulations, a person must knowingly associate himself with an unlawful venture and participate in it as something he wishes to bring about and seek by his actions to make succeed. In re Richardson Securities, Inc., [1980-1982 Transfer Binder] Comm. Fut. L. Rep. (CCH) 21,145, at 24,642-24,646 (CFTC Jan. 27, 1981).

As set forth above, Dull and Marisie, while Refco employees, did not properly and completely prepare the written records of customer orders required of Refco as a FCM by Regulation 1.35(a-1). Dull and Marisie accepted many orders from Goldinger without obtaining account identification, Dull and/or Marisie also sometimes added account numbers, at Goldinger's direction, to order tickets after the orders had been executed. Finally, Dull and/or Marisie changed account numbers for orders that had already been executed. As a result of Dull and Marisie's conduct as Refco employees, Refco violated Section 4g of the Act and Regulation 1.35(a-1). Dull and Marisie thus aided and abetted these violations.

IV.

OFFERS OF SETTLEMENT

Dull and Marisie have submitted Offers of Settlement in which they neither admit nor deny the allegations of the Complaint or the findings herein. Subject to the foregoing, Dull and Marisie: acknowledge service of this Order and admit the jurisdiction of the Commission with respect to the matters set forth herein; waive: (1) a hearing; (2) 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, 5U.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 action; 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. Dull and Marisie stipulate that the record basis on which this Order is entered consists of the Complaint, this Order and the findings to which they have consented in their Offers, which are incorporated in this Order. Dull and Marisie consent to the Commission's issuance of this Order, which makes findings as set forth herein, and orders Dull and Marisie to cease and desist from violating the provisions of the Act and the Regulations they are found to have violated; orders that Dull and Marisie shall be liable for payment of a civil monetary penalty of $15,000 each; orders Dull and Marisie to comply with their respective undertakings as set forth in the Offers and this Order; and places conditions on their activities for a period of two years following the entry of this Order to the extent they act in any capacity which involves the execution, allocation, writing, receipt or transmission of orders for futures contracts or options on futures contracts, other than for their own accounts, as set forth herein.

V.

FINDINGS OF VIOLATIONS

Solely on the basis of the consents evidenced by the Offers, and prior to any adjudication on the merits, the Commission finds that Dull and Marisie violated Section 4g of the Act, and Regulation 1.35(a-1)(2), and aided and abetted violations of Section 4g of the Act and Regulation 1.35(a-1)(1) and 1.35(a-1)(2) pursuant to Section 13(a) of the Act.

VI.

ORDER

Accordingly, IT IS HEREBY ORDERED THAT:

A. Dull and Marisie shall cease and desist from violating Section 4g of the Act, and Regulation 1.35(a-1)(1) and 1.35(a-1)(2);

B. Dull and Marisie shall each pay a civil monetary penalty in the amount of fifteen thousand dollars ($15,000) within ten (10) days of the date of this Order. Dull and Marisie 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 21st Street, N.W., 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, N.W., Washington D.C. 20581. In accordance with Section 6(e)(2) of the Act, 7 U.S.C. 9a(2) (1994), if Dull or Marisie fails to pay the full amount of this penalty within fifteen (15) days of the due date, he or she 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 or she shows to the satisfaction of the Commission that payment of the full amount of the penalty imposed against him or her with interest thereon to the date of payment has been made;

C. Dull and Marisie shall comply with their undertakings, as set forth in their Offers:

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

2. For the two year period beginning on the date of the entry of the Commission Order accepting this Offer, not to:

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; and

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 execution, allocation, writing, receipt, or transmission of orders for futures contracts or options on futures contracts, other than for, respectively, Dull's own account (which, as used herein, shall include the account of Dull's husband) or Marisie's own account; and

d. not to act in any capacity, whether registration with the Commission is required or not, which involves the execution, allocation, writing, receipt, or transmission of orders for futures contracts or options on futures contracts, other than for their own accounts, unless these activities are subject to the following conditions:

1. These activities shall be 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 his or her sponsor, he or she shall stop acting in any capacity which involves the execution, allocation, writing, receipt, or transmission of orders for futures contracts or options on futures contracts, other than for his or her own account until his or her activities are once again subject to a Supplemental Sponsor Certification Statement in the form attached hereto, executed and submitted to the Commission by a qualified sponsor.

2. To obtain approval of a Supplemental Sponsor Certification Statement, Dull or Marisie shall notify the Director of the Division of Enforcement in writing by facsimile and certified mail (addressed to Director of the Division of Enforcement, Commodity Futures Trading Commission, 1155 21st Street, N.W., Washington D.C. 20581), that he or she has been employed to act in a capacity, whether registration with the Commission is required or not, which involves the execution, allocation, writing, receipt, or transmission of orders for futures contracts or options on futures contracts, other than for, respectively, Dull's own account or Marisie's own account, and shall forward an executed Supplemental Sponsor Certification Statement, in the form attached hereto, for approval by the Commission.

3. Dull's or Marisie's registration shall be automatically suspended if, while registered with the Commission and subject to the Supplemental Sponsor Certification statement as provided in Paragraph VI.C.2.d.1., supra, he or she is charged with a disciplinary offense as defined in Regulation 1.63(a)(6), 17 C.F.R. 1.63(a)(6) (1999), except that, as to offenses defined in Regulation 1.63(a)(6)(i)(C), suspension shall occur if fines aggregating $5,000 or more are imposed during the period of these restrictions rather than during a calendar year.

4. Dull or Marisie shall immediately cease from acting in any capacity which involves the execution, allocation, writing, receipt, or transmission of orders for futures contracts or options on futures contracts, other than for his or her own account, whether registration with the Commission is required or not, if while acting in such capacity, he or she is charged with a disciplinary offense as defined in Regulation 1.63(a)(6), except that, as to offenses defined in Regulation 1.63(a)(6)(i)(C), cessation of his or her activities shall occur if fines aggregating $5,000 or more are imposed during the period of these restrictions rather than during a calendar year.

5. If, pursuant to the preceding two subparagraphs, Dull's or Marisie's registration is automatically suspended or if he or she is required to cease acting in any capacity which involves the execution, allocation, writing, receipt, or transmission of orders for futures contracts or options on futures contracts, other than for his or her own account, whether registration with the Commission is required or not, pursuant to the preceding subparagraphs, the period of suspension or cessation of activities shall terminate six months after the date of the suspension or cessation, unless the Commission files within that period a Notice of Intent to Suspend, Revoke or Restrict Registration pursuant to Regulation 3.60(a), 17 C.F.R. 3.60(a) (1999), of a Complaint pursuant to Section 6c or 6(c) of the Act, 7 U.S.C. 13a-1 or 9 (1994). If such Notice or Complaint is filed within the six-month period, he or she shall cease acting in any capacity, which involves the execution, allocation, writing, receipt, or transmission of orders for futures contracts or options on futures contracts, other than for, respectively, Dull's own account or Marisie's own account, whether registration with the Commission is required or not, and, if registered, his or her registration shall be suspended, until a final order is entered resolving all issues arising under such Notice or Complaint.

The provisions of this Order shall be effective on this date.

By the Commission.
Dated: April 10, 2000
Jean A. Webb
Secretary to the Commission

Commodity Futures Trading Commission


NOTES:

1 Respondents do not consent to the use of the Offers or this Order, or the findings to which they have consented in the Offers, as the sole basis for any other proceeding brought by the Commission other than a proceeding brought to enforce the terms of this Order. Nor do they consent to the use of the Offers or this Order by any other person or entity in this or any other proceeding. The findings to which they have consented in the Offers, as contained in this Order, are not binding on any other person or entity named as a respondent or defendant in this or in any other proceeding.

2 On November 12, 1999, the federal district court for the Central District of Los Angeles entered an "Order of Permanent Injunction and Other Equitable Relief" against Goldinger and Capital Insight, ordering them to disgorge $6,000,000 in ill-gotten gains and enjoining them from, inter alia, violating the Act and acting in any capacity for which registration with the Commission is required under the Act. On December 13, 1999, Goldinger pleaded guilty in federal district court to wire fraud for running the fraudulent allocation scheme. On May 24, 1999, the Commission issued an order instituting proceedings, making findings and imposing remedial sanctions against Refco, finding that in connection with Goldinger's scheme, Refco violated Section 4g of the Act and Regulations 1.35(a-1)(1) and 166.3, 17 C.F.R. 1.35(a-1)(1), 166.3 (1999) (CFTC docket #99-12).