Release 4543-01 (CFTC Docket No. 01-15)
For Release July 12, 2001
CFTC FILES AND SETTLES ENFORCEMENT ACTION AGAINST A CHICAGO FLOOR BROKER FOR FAILING TO SUPERVISE A TRADER HE SPONSORED
CFTC Finds that Michael Thomas Lee Violated an Order and Sponsor
Agreement and Suspends His Registration
Order Underscores Need For Sponsors To Take Duties Seriously
WASHINGTON, D.C.-- The United States Commodity Futures Trading Commission (CFTC) announced today simultaneous filing and settling of an administrative proceeding against Michael Thomas Lee of Marengo, Illinois, for failing to abide by his obligation under a previous order that required him to supervise an S&P 500 trader.
As set forth in today’s order, in December 1997, the Chicago Mercantile Exchange found Brian Ray (Ray), a floor broker, guilty of trading violations in the S&P 500 futures pit. Following this disciplinary action, the National Futures Association (NFA), an industry self-regulatory organization acting upon authority delegated to it by the CFTC, issued an order that placed restrictions upon Ray’s registration for two years and required Ray to find an industry sponsor before Ray could resume trading.
According to the order, Lee, a registered floor broker, agreed to sponsor Ray and signed a Supplemental Sponsor Certification Statement (SSCS) on January 29, 1999, that detailed his duties as a sponsor. Both the NFA Order and the SSCS required Lee, among other duties, to conduct weekly reviews of all statements of accounts in which Ray had a direct or indirect interest and to maintain records of those weekly reviews for a period of two years. The CFTC finds in today’s order that from the beginning of Ray’s two-year period of restricted registration in May 1999 through February 2000, Lee did not conduct the required weekly reviews of Ray’s account statements or maintain the necessary records. Under the Commodity Exchange Act (CEA), the NFA order is considered an order of the CFTC, and, the CFTC finds that, as a result of Lee’s failure to meet his obligations as a sponsor, he violated the order, the CEA and CFTC regulations.
The CFTC order directs Lee to cease and desist from further violations of the CEA and Commission regulations as charged. The order also suspends Lee’s registration as a floor broker for 30 days and requires him to pay a civil monetary penalty of $12,500. In addition, the order prohibits Lee from sponsoring any conditioned or restricted registrant for a period of three years from the date of the order.
In consenting to today’s order, Lee neither admitted nor denied the findings in the order.
A copy of the CFTC order may be found at
Scott R. Williamson
Acting Regional Counsel
Central Regional Office
Division of Enforcement