For Release: July 23, 2002
CFTC SUSPENDS TWO FLOOR BROKERS FOR UNLAWFULLY TRADING COFFEE FUTURES CONTRACTS
In Settlement, Joseph Defrancesco Found to Have Engaged in Fraud, Bucketing of Customer Orders, and Reporting Non-Bona Fide Prices, and Marc Greenstein Found to Have Engaged in Noncompetitive Trading, Wash Sales, and Accommodation Trades
WASHINGTON, D.C. – The Commodity Futures Trading Commission (CFTC) announced today that it has accepted offers of settlement submitted by, and issued an order (Order) against, Joseph Defrancesco (Defrancesco) of Long Beach, New York, and Marc Greenstein (Greenstein) of East Hills, New York, both of whom are registered with the CFTC as floor brokers. In the order, which arises out of an administrative proceeding brought against Defrancesco, Greenstein, and others in March 2002 (see CFTC News Release 4621-02, March 20, 2002), the CFTC finds that on certain days, from February 2000 through November 2000, the respondents unlawfully executed coffee futures trades on the Coffee, Sugar & Cocoa Exchange (CSCE), a subsidiary of the New York Board of Trade.
Specifically, the CFTC order finds that Defrancesco fraudulently executed trades in the coffee futures ring of the CSCE by knowingly or recklessly trading ahead of executable customer orders on the same side of the market and allocating trades to his personal account at better prices than those received by his customers. The order also finds that Defrancesco indirectly bucketed his customer orders by non-competitively trading for his own account indirectly opposite his customers’ orders, and that, by engaging in noncompetitive trading, Defrancesco also reported prices on his trading cards, to his customers and to CSCE, that were not bona fide. The order also finds that Defrancesco and Greenstein traded non-competitively and entered into illegal wash sales and accommodation trades by assisting other brokers in taking the opposite side of their customers’ orders. Finally, the order finds that Defrancesco failed to record required trading information on his trading cards.
Defrancesco, without admitting or denying the allegations contained in the complaint or the findings contained in the order, consented to the issuance of the order, which finds that he violated section 4b(a)(i), (iii) and (iv) of the Commodity Exchange Act (CEA) (fraud), section 4c(a)(1) of the CEA (wash sales and accommodation trading), section 4g of the CEA and section 1.35 of the CFTC’s regulations (record keeping), and section 1.38 of the CFTC’s regulations (non-competitive trading). The CFTC order requires Defrancesco to cease and desist from further violation of the provisions he is found to have violated and to pay a civil monetary penalty in the amount of $75,000. The order further orders that Defrancesco’s registration as a floor broker be suspended for a period of six months, that Defrancesco be prohibited from executing customer trades for a period of five years after his suspension is completed, and that Defrancesco’s activities as a floor trader after his suspension is completed be subject to conditions, including the obtaining of a qualified sponsor.
Greenstein, without admitting or denying the allegations contained in the complaint or the findings contained in the order, consented to the issuance of the order, which finds that he violated section 4c(a)(1) of the CEA (wash sales and accommodation trading) and section 1.38 of the CFTC’s regulations (non-competitive trading). The order requires Greenstein to cease and desist from further violation of the provisions he is found to have violated and to pay a civil monetary penalty in the amount of $35,000, and further orders that Greenstein’s registration as a floor broker be suspended for a period of three months.
The following Division of Enforcement staff are responsible for the case: Richard Wagner, John Dunfee, Jason Gizzarelli and Margaret Kanyan.
Richard Wagner, Associate Director
CFTC Division of Enforcement
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