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No. 44-99 October 22, 1999 |
Weekly Advisory
Commodity Futures Trading Commission Three Lafayette Centre
1155 21st Street, NW Washington, DC 20581 Telephone: (202) 418-5080
Facsimile: (202) 418-5525 |
On Thursday, October 28, 1999, Chairman
William Rainer will give the opening remarks at the
22nd Annual Chicago-Kent Derivatives and Commodities Law
Institute Conference, Palmer House Hilton Hotel, 17 East Monroe Street,
Red Lacquer room, Chicago, Illinois, 8:00 a.m.
On Thursday, October 28, 1999, Commissioner
James E. Newsome will participate in a panel discussion on
the CFTC's Millennium Agenda at the Derivatives and Commodities Law
Institute, presented by the Chicago-Kent College of Law, Palmer House
Hilton Hotel, Chicago, Illinois, 2:00�p.m.
On Friday, October 29, 1999, Commissioner
Barbara Pedersen Holum will participate in a panel
discussion on CFTC reauthorization at the Derivatives and Commodities Law
Institute, presented by the Chicago-Kent College of Law, Palmer House
Hilton Hotel, Chicago, Illinois, 8:00�a.m.
On October 15, 1999, the Commission
held a closed meeting to discuss surveillance matters.
On October 20, 1999, the Commission
held a closed meeting to discuss a rule enforcement
review.
On October 22, 1999, the Commission will
hold a closed meeting to discuss surveillance matters.
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October 15, 1999
CFTC NOTIFIES THE CHICAGO MERCANTILE EXCHANGE OF ITS RESULTS OF
A RULE ENFORCEMENT REVIEW
WASHINGTON -- The Commodity Futures Trading Commission (Commission) has
notified the Chicago Mercantile Exchange (CME) of the results of a rule
enforcement review completed by the Commission's Division of Trading
and Markets (T&M). The purpose of the review was to evaluate
CME's market surveillance, trade practice surveillance, and
disciplinary programs, and certain aspects of CME's audit trail. The
target period for the review was August 1, 1997 through July 31,
1998.
T&M found that CME generally has an adequate market surveillance
program. CME staff closely monitor cash and futures prices, spread and
basis relationships, size and ownership of deliverable supply, size of
large trader positions relative to total open interest and deliverable
supply, and the positions of large traders and clearing members. T&M
made recommendations concerning, among other things, the documentation of
surveillance activities and improving the timeliness of position
accountability reviews.
T&M also found that CME maintains an adequate trade practice
surveillance program through the use of automated computer surveillance,
visual floor surveillance, and video camera surveillance. The Division
made recommendations with respect to the documentation of investigation
activities and the documentation of continued monitoring of members'
trading activity when an investigation is closed with such a
recommendation.
CME also maintains an adequate program of conducting back office audits
to review members' compliance with order ticket and trading card
recordkeeping requirements. CME members have a high level of compliance
with order ticket account identification and timestamping requirements,
and with several trading card recordkeeping requirements. The Division
found, however, that member compliance fell below an acceptable level for
several trading card recordkeeping standards, including the timely
collection and timestamping of trading cards. Accordingly, T&M
recommended that CME take appropriate action to increase member
compliance with trading document recordkeeping requirements.
Finally, T&M found that CME maintains an effective disciplinary
program. Disciplinary matters are promptly referred to a disciplinary
committee, disciplinary proceedings are completed in a timely manner, and
findings appear to be supported by the evidence. Further, penalties
imposed appear reasonable relative to the conduct sanctioned and are in
amounts likely to deter further violations.
CME will have 60 days to respond to these and other recommendations set
forth in the report. Copies of the report are available from the
Commission's Office of Public Affairs, Three Lafayette Centre, 1155
21st Street, N.W., Washington, D.C. 20581, (202) 418-5080, or
by accessing the Commission's website at www.cftc.gov.
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October 19, 1999
CFTC Announces the Appointment of C. Robert Paul as General
Counsel
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) has
announced the appointment of C. Robert Paul as General Counsel, effective
October 10, 1999. Mr. Paul comes from Credit Suisse First Boston
Corporation in New York, where he has been Vice President and Counsel
since 1997. From 1987 to 1997, Mr. Paul was Associate General Counsel and
First Vice President with Dean Witter, Discover & Co. in New
York.
Mr. Paul received his B.A. degree from the University of Pennsylvania in
1977 and his Juris Doctor degree from the New York University School of
Law in 1980. Mr. Paul is a member of the City of New York Bar.
As legal advisor to the Commission, the Office of General Counsel (OGC)
reviews all substantive regulatory, legislative, and administrative
matters presented to the Commission. OGC also advises the Commission on
the application and interpretation of the Commodity Exchange Act and
other administrative statutes.
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October 19, 1999
CFTC Announces Appointment of John C. Lawton as Acting Director
of the Division of Trading and Markets
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) has
announced the appointment of John C. Lawton as Acting Director, the
Division of Trading and Markets, effective October 4, 1999. Lawton served
as the Division's Deputy Director, Audit and Review Section since
1998 and previously, from 1988 to 1998, had been Associate Director of
the Division.
Mr. Lawton received his J.D. degree from the Georgetown University Law
center in 1979, and his B.A. degree from the University of Notre Dame.
Mr. Lawton also was an attorney with Donelan, Cleary, Wood & Maser,
Washington, D.C., from 1979-80.
The Trading and Markets Division develops, implements, and interprets
regulations promulgated under the Commodity Exchange Act; oversees the
compliance activities of the futures industry self-regulation
organizations, which include the U.S. commodity exchanges, their
clearinghouses, and the National Futures Association; conducts trade
practice surveillance; performs financial compliance audits of
registrants; and, oversees the registration of industry professionals,
among other activities.
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October 21, 1999
CFTC FILES COMPLAINT IN HAWAII FEDERAL COURT AGAINST DAVID T.
MARANTETTE, III AND TROUBADOUR, INC., CHARGING FRAUD IN SOLICITING
CUSTOMERS TO INVEST IN COMMODITY POOLS AND PURCHASE COMMODITY TRADING
ADVISORY SERVICES
Federal Court Enters a Consent Order of Preliminary Injunction
Prohibiting Marantette and Troubadour from Engaging In Fraudulent
Activities, Barring the Destruction of Documents, and Freezing the
Defendants' Assets
WASHINGTON � The Commodity Futures Trading Commission (CFTC)
announced the filing on September 22, 1999, of a five-count civil
injunctive complaint in the U.S. District Court for the District of
Hawaii against David T. Marantette, III and
Troubadour, Inc., both of Princeville, Hawaii.
The CFTC complaint alleges that Marantette and Troubadour fraudulently
solicited members of the public to invest in commodity pools and to use
their commodity trading advisory services by making material
misrepresentations about profitable trading and failing to disclose the
material fact that Marantette had been barred from the securities
industry. The complaint also alleges that Marantette and Troubadour
operated the pools without being registered as commodity pool operators.
As alleged, Marantette appears to be president, treasurer, director, and
primary shareholder of Troubadour, Inc.
On October 14, 1999, the Honorable Susan Oki Mollway of the U.S.
District Court for the District of Hawaii entered a consent order of
preliminary injunction against Marantette and Troubadour, Inc., enjoining
them from violating the Commodity Exchange Act (CEA) and CFTC
regulations, prohibiting them from destroying their books and records,
imposing a freeze on their assets, and requiring them to provide an
accounting of investor funds and their assets to the CFTC.
The CFTC's complaint alleges that the defendants violated the
anti-fraud provisions of the CEA, specifically sections 4b(a), 4c(b) and
4o of the CEA, and CFTC regulations 4.41 and 33.10. The complaint
also alleges that Marantette and Troubadour, Inc. violated section 4m of
the CEA by failing to register as commodity pool operators.
The CFTC alleges that:
--������������ Marantette and Troubadour, Inc., through private offering memoranda and over the internet, fraudulently solicited members of the public to purchase commodity trading advisory products, including the defendants' weekly commodity trading advisory newsletters, the Goldstock Letter and Dear Dow Letter;
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Marantette and Troubadour, Inc. fraudulently solicited customers to
invest in two commodity pools, Troubadour I, and
Troubadour II; and
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Marantette fraudulently solicited customers to invest in the commodity
pool, Cycles in Gold,by falsely representing that
Marantette and Troubadour, Inc. had made substantial profits over the
past 12 years using a cyclic analysis program, when, in fact, the profits
were based on hypothetical trading results, and by failing to disclose
that Marantette had been permanently barred from the securities industry
in 1992.
In its continuing litigation against the defendants, the CFTC is seeking
a permanent injunction against further violations of the CEA and CFTC
regulations, disgorgement of ill-gotten gains, restitution to defrauded
customers, and civil monetary penalties of not more than $110,000 per
violation or triple the monetary gain for each violation committed. A
trial date has not been set.
No Opinions Updates were issued during this period.
On October 14, 1999, the Commission designated the COMEX
Division of the New York Mercantile Exchange as a contract market in the
FTSE Eurotop 300 Stock Index Futures and Option Contracts.
On October 20, 1999, the Commission authorized for
publication in the Federal Register a notice of the
Twenty-Seventh meeting of the Commission's Agricultural Advisory
Committee to be held November 9, 1999.
On October 20, 1999, the Commission approved the
charter of its Technology Advisory Committee and authorized for
publication in the Federal Register a notice of its
establishment, and an order amending the termination date of the
Commission's Financial Products Advisory Committee.
No CFTC Federal Register Notices were published during this period.
NOTE:
All Comment Letters must be received by the Commission no later than the closing date specified in the applicable Federal Register release. Any requests for an extension of the comment period must be made in writing - - before the expiration of the comment period - - to the Commission's Office of the Secretariat.
Comment period concerning the New York Board of Trade's proposal on
new rules and rule amendments that would establish block trading
procedures at Cantor Financial Futures Exchange, Inc., ends,
October 22, 1999.
Comment period concerning the Commission's proposal to amend its
regulations to clarify when foreign futures and options brokers who are
members of a foreign board of trade must register or obtain an exemption
from registration ends, October 25, 1999.
Comment period concerning the Commission's proposal to amend its
rules and regulations concerning foreign futures and options transactions
to include new rule 30.12 ends, October 25, 1999.
Comment period concerning the Commission's proposal to adopt new
rules allowing the use of electronic signatures in lieu of
handwritten signatures for certain purposes under the Commission's
regulations ends, October 29, 1999.
Comment period concerning the Commission's proposal to adopt a rule
to exempt a new system of records, concerning, inter alia, complaints of
sexual harassment, from sections 552a(c)(3), (d), (e)(1), (e)(4)(G), (H),
(I), and (F) of the Privacy Act of 1974 on the basis that the system is
investigatory material compiled for law enforcement purposes ends,
November 1, 1999.
Comment period concerning establishment of a new system of records under
the Privacy Act that will contain information about employees of the
Commission and third parties who are visiting or working at Commission
offices who are accused of sexual or other unlawful harassment, ends,
November 1, 1999.
Armen M. Khatchaturian v. American National Trading Corp., d/b/a
Anco Discount Futures, Frank Joseph Pishler, and Dollar Varden.
Filed August 19, 1999. The parties' stipulated to a dismissal of this
proceeding. Accordingly, the complaint and counterclaim were dismissed
with prejudice, and this proceeding was terminated in its entirety.
Administrative Law Judge, Bruce C. Levine. CFTC Docket Bo. 98-R168.
Richard Dix Leppert v. Thomas Rudel Glover, II, LMB Trading
Group, Inc., and Universal Financial Holding. Filed October 19,
1999. Respondent Thomas Rudel Glover failed to file an answer and was
held in default. Glover's default constituted, among other things, an
admission of the allegations in the complaint. Accordingly, it was
concluded that Thomas Rudel Glover had violated section 4c(b) of the
CEAct, and Commission rule 33.10. As such, Thomas Rudel Glover was
ordered to pay Richard Dix Leppert reparations of $4,439, plus interest
on that amount at 5.411% compounded annually from April 6, 1999, to the
date of payment, plus $50 in costs for the filing fee. Glover's
default did not establish the liability of the remaining respondents.
Philip V. McGuire, Judgment Officer. CFTC Docket No. 99-R148.
Futures Fundings Trust v. Eugene Herbert Payne, Robbins Futures,
Inc., Robbins Trading Company, & John Michael Wintz. Filed
October 20, 1999. The parties settled this case in a pre-hearing session
on September 2, 1999. Accordingly, this proceeding was dismissed with
prejudice. Joel R. Maillie, Judgment Officer. CFTC Docket No.
98-R175.
Jack O. Ford v. American Financial Trading Corporation and
Alexander Higgins Brown. Filed October 20, 1999. The parties
settled this case prior to the September 14, 1999 default order. The
parties requested that the default be vacated and the proceeding be
dismissed in their settlement. Accordingly, the default order and
reparation award dated September 14, 1999, was vacated and the proceeding
was dismissed. Joel R. Maillie, Judgment Officer. CFTC Docket No.
99-R162.
No Opinions and Orders were issued during this period.
No CFTC Letters were issued during this period.