For Release: November 18, 2003
U.S. COMMODITY FUTURES TRADING COMMISSION FINDS THAT FORMER COMMODITIES ACCOUNT EXECUTIVE ENGAGED IN FRAUDULENT ALLOCATION SCHEME
CFTC Order Imposes Civil Monetary Penalty of $159,000 and a 10-year Trading Ban
Washington, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) announced today the issuance of a consent order settling an administrative enforcement action against former commodities trader Kevin Marshburn of Tampa, Florida.
The consent order finds that, at various times from May 1993 through March 1994, Marshburn -- then an account executive in Prudential Securities Inc.’s (PSI) Orlando, Florida, office -- accepted or caused others to accept customer orders without creating required written records of the orders that included account identification information or order times. Marshburn then entered, or caused others to enter, the orders onto the trading floor without providing necessary account identification, according to the order.
The order further finds that after the orders were executed, Marshburn allocated the trades that had been entered without account identification, either to his personal account or to one or more of three specific customer accounts. Marshburn allocated trades made at better prices, or profitable round-turn trades, to his personal account, and trades made at worse prices, or less profitable or losing trades, to the customer accounts, thereby defrauding his customers, the order finds. Finally, the order finds that Marshburn aided and abetted his employer’s failure to retain and produce unfilled or canceled customer orders prepared during the period May 1993 through March 1994.
Without admitting or denying the claims, Marshburn consented to the entry of the CFTC order, which makes findings that Marshburn violated antifraud and recordkeeping sections of the Commodity Exchange Act and CFTC regulations, and:
Marshburn was the last remaining respondent in this action. The Commission settled with PSI in October 2002 and with the two other former PSI account executives who worked with Marshburn in September 2003. Those account executives, Kathleen Chiappone and Kathryn Sarabasa, had been charged with aiding and abetting PSI’s recordkeeping violations. In addition to imposing cease and desist orders, the Commission ordered them to pay civil penalties of $8,000 and $5,000, respectively, and Sarabasa further was required to comply with her undertaking not to seek Commission registration for two years.
The following Division of Enforcement Staff were responsible for this case: Rosemary Hollinger, Gretchen Lowe, Susan Bovee, William Hoar, Vincent Johnson, Jennifer Diamond, Cynthia Canon, and Patricia Gomersall.
Copies of the Commission’s complaint and order may be found at http://www.cftc.gov.
Associate Director, Regional Counsel
CFTC Division of Enforcement
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