CFTC New Release: 4522-01 (CFTC Docket No. 01-08)
For Release: June 4, 2001
FLOOR BROKER -- MICHAEL H. VARNER -- CHARGED WITH VIOLATING A 1999 CFTC ORDER
WASHINGTON - The Commodity Futures Trading Commission (CFTC) announced today that on May 31, 2001, it filed an enforcement action against Michael H. Varner (Varner) of Memphis, Tennessee, charging him with violating a CFTC order issued against him in June 1999. Under the terms of the CFTC order, the filing of the complaint against Varner triggered an automatic suspension of his registration as a floor broker.
Specifically, the CFTC charges that Varner violated a CFTC order issued on June 4, 1999 (1999 Order), that restricted his registration as a floor broker on the New York Cotton Exchange and his trading activities for a two-year period. The CFTC contends that Varner violated three provisions of the 1999 Order, which: (1) prohibited Varner from directly or indirectly trading on behalf of customers; (2) required that Varner clear all his trades through MBF Clearing Corp., a registered futures clearing merchant; and (3) prohibited Varner from directly or indirectly acting as a principal, partner, officer, or branch office manager of any entity registered or required to be registered with the Commission. (The 1999 Order resulted from an offer by Varner to settle a pending disqualification action against him, in which the CFTC was seeking to revoke, suspend or restrict Varner’s registration based on his prior exchange disciplinary history.)
As alleged in the complaint, Varner violated the 1999 Order by:
• trading on behalf of at least one customer;
• clearing trades through another registered futures commission merchant and not MBF Clearing Corp.; and
• acting as (1) a principal in and a branch manager of Varner Brokerage, Co., Inc., a registered introducing broker; and (2) as President of Hunter Trading, Inc., a registered Commodity Trading Advisor.
A public hearing has been ordered to determine whether the allegations are true, and, if so, what sanctions are appropriate. Possible sanctions include a cease and desist order, revocation, suspension or restriction of his registration, a trading prohibition, and a civil monetary penalty of $110,000 per violation or three times the monetary gain.
Notes to Editor:
The CFTC filed a statutory disqualification action against Varner in January 1999, alleging that good cause existed to revoke, suspend or restrict his floor broker registration based on 35 disciplinary actions brought against him by the New York Cotton Exchange (now a part of the New York Board of Trade). As alleged by the CFTC, the most serious of the exchange charges involved trading ahead, prearranged trading and accommodation trading.