Release: 4749-03 (CFTC Docket No. 02-09)
For Release: February 4, 2003
FLOOR BROKER SETTLES CHARGES OF UNLAWFULLY TRADING COFFEE FUTURES
CFTC Finds that Ronald Kilbride Engaged in Fraud, Bucketing of Customer Orders and Reporting Non-Bona Fide Prices, Noncompetitive Trading, Wash Sales and Accommodation Trades
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today the issuance of an order settling a pending action against Ronald Kilbride of Morganville, New Jersey, who is registered with the CFTC as a floor broker. The order arises out of a CFTC administrative proceeding brought against Kilbride and others in March 2002, which alleges that on several dates between February 2000 and November 2000, they unlawfully executed coffee futures trades on the Coffee, Sugar & Cocoa Exchange (CSCE), a subsidiary of the New York Board of Trade. (See CFTC News Release 4621-02, March 20, 2002.)
The order finds that Kilbride 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 Kilbride indirectly bucketed his customer orders by non-competitively trading for his own account indirectly opposite his customer orders and that Kilbride engaged in noncompetitive trading. According to the order, as a result of such noncompetitive trading, Kilbride reported prices on his trading cards to his customers and to CSCE that were not bona fide. The order further finds that Kilbride entered into illegal wash sales and accommodation trades by assisting other brokers in taking the opposite side of their customers orders. Kilbride also failed to record required trading information on his trading cards, the order finds.
Kilbride Agrees to Three Month Suspension and Restrictions on Trading
Kilbride, who neither admitted nor denied the allegations of the complaint nor the findings contained in the order, consented to entry of the Commission’s order, which requires him to cease and desist from further violations and pay a civil monetary penalty in the amount of $50,000 pursuant to a payment plan. The order also suspends his registration as a floor broker for six months, prohibits him from executing customer trades for a period of three years after his suspension is completed, and subjects his trading to certain conditions and restrictions once it resumes, including having a qualified sponsor to monitor his trading.
Respondents Joseph Defrancesco and Marc Greenstein previously settled with the CFTC on similar terms (see CFTC News Release 4676-02, July 23, 2002). A public hearing has been ordered to determine whether the allegations as to the remaining respondent are true and, if so, what sanctions are appropriate and in the public interest. Possible sanctions include a cease and desist order, restitution to defrauded customers, civil monetary penalties, trading prohibitions, and registration revocations, suspensions or restrictions.
The following Division of Enforcement staff are responsible for the case: Gretchen Lowe, Richard Glaser, John Dunfee, Jason Gizzarelli, and Margaret Kanyan.
Richard Wagner, Deputy Director
CFTC Division of Enforcement
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