CFTC News Release 4439-00 (CFTC Docket No. 99-17)
For Release August 31, 2000
CFTC ACCEPTS SETTLEMENT OFFER OF FORMER REFCO FLOOR BROKER CONSTANTINE MITSOPOULOS IN CONNECTION WITH SUPERVISION AND RECORDKEEPING VIOLATIONS
CFTC Orders Mitsopoulos to Pay A $1,000,000 Civil Monetary Penalty And To Comply With His Undertakings, Including Never To Seek Registration With the CFTC
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today the issuance of an order accepting the offer of settlement of Constantine Mitsopoulos, a formerly registered floor broker, of the Chicago area, to resolve a CFTC complaint filed against him on September 30, 1999 (see CFTC News Release 4317-99, September 30, 1999). The CFTC order finds that Mitsopoulos committed recordkeeping and supervision violations that facilitated a trade allocation fraud carried out by an introducing broker, Capital Insight Brokerage Inc. (Capital Insight), and its owner and president, S. Jay Goldinger (Goldinger). In offering to settle the proceeding, Mitsopoulos neither admitted nor denied the allegations of the complaint or the findings in the order.
The CFTC order finds that from at least January 1994 to December 1995, Mitsopoulos failed to supervise diligently Refco, Inc. (Refco) phone clerks handling orders for treasury bond futures and options on futures traded on the Chicago Board of Trade. The order also finds that Mitsopoulos failed to comply with order-taking and record-keeping requirements, and that he aided and abetted Refco’s record-keeping violations. Mitsopoulos was the supervisor of the Refco floor desk phone clerks and also wrote orders himself.
Specifically, the order finds that over approximately two years, from at least January 1994 through December 1995, Mitsopoulos allowed Goldinger to enter orders through the Refco floor desk without providing account identification at the time the orders were entered, and allowed the phone clerks working under his supervision to routinely accept orders from Goldinger without immediately recording account identification on the floor order tickets. In addition, Mitsopoulos allowed the phone clerks working under his supervision to help Goldinger change account numbers for trades already executed and for which Goldinger had already provided account numbers. The order also finds that handling Goldinger’s orders constituted most of Mitsopoulos’ business.
Mitsopoulos to Pay One Million Dollar ($1,000,000) As A Civil Monetary Penalty
Mitsopoulos has consented to the entry of the CFTC order that makes findings that he violated the CEA and CFTC regulations as set forth above and
Phyllis Cela, the acting Director of the Division of Enforcement, commented that:
"The Commission takes very seriously the role that the record-keeping and supervisory obligations of registrants plays in maintaining the integrity of the futures and options on futures markets. This settlement imposes a significant civil monetary penalty, that reflects the importance of both record-keeping and supervision in discouraging trade allocation fraud."
The CFTC Has Filed and Settled Related Actions Against Goldinger, Capital Insight, Refco, and Refco phone clerks Margaret Dull and Richard Marisie
On November 12, 1999, the federal district court for the Central District of Los Angeles entered a consent order of permanent injunction and other equitable relief against Goldinger and Capital Insight based on the fraudulent allocation scheme in a related action, which required disgorgement of $6 million in ill-gotten gains and enjoined them from, inter alia, violating the CEA and acting in any capacity for which CFTC registration is required (see CFTC News Release 4335-99, November 8, 1999). On December 13, 1999, Goldinger pled guilty in federal district court to wire fraud in connection with the fraudulent allocation scheme.
On May 24, 1999, the CFTC filed and settled a related action against Refco, charging order-taking and recordkeeping violations and a failure to supervise in connection with the trade allocation scheme. Refco was ordered to pay $7 million, to cease and desist from further violations, and to conduct an internal review of its compliance policies and procedures (see CFTC News Release 4269-99, May 24, 1999). Refco neither admitted or denied the findings of the order.
On April 10, 2000, the CFTC issued an order accepting the settlement offers of Refco phone clerks Margaret Dull and Richard Marisie, who were named in the same complaint with Mitsopoulos. The CFTC order found that Dull and Marisie violated the record-keeping provisions of the CEA and regulations, and aided and abetted Refco’s recordkeeping violations. Dull and Marisie were ordered to pay $15,000 each in civil monetary penalties, and their floor activities were restricted and conditioned for a two-year period (see CFTC News Release 4393-00, April 10, 2000). Dull and Marisie neither admitted or denied the allegations of the complaint or the findings of the order.
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