Release:4001-97 (CFTC Docket 93-2)
For Release: March 12, 1997
CFTC ACCEPTS SETTLEMENT OFFER FROM CRAIG W. EFFRON
Settlement Order Revokes Effron's Registration with the CFTC and,
Among Other Things, Directs Him to Pay a $100,000 Civil Monetary Penalty
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that it has issued an order accepting an offer of settlement from Craig W. Effron, a trader on the Commodity Exchange Inc. (COMEX) and the New York Mercantile Exchange (NYMEX), in connection with a complaint filed by the CFTC on October 19, 1992. Effron is registered with the CFTC as a floor trader.
The CFTC order finds that Effron violated the Commodity Exchange Act (CEA) by aiding and abetting the fraudulent actions of COMEX and NYMEX floor brokers with respect to the brokers' handling of their customers' orders. The CFTC order further finds that Effron also violated provisions of the CEA and the CFTC regulations prohibiting noncompetitive trading; fictitious sales, wash sales and accommodation trading; and causing the reporting of non-bona fide prices.
The CFTC order finds that Effron, trading for his own account, participated in noncompetitive trades with floor brokers. According to the CFTC order, Effron's noncompetitive trading assisted the floor brokers in cheating and defrauding their customers by trading indirectly opposite, or bucketing, their orders, or by trading opposite the orders of a broker executing orders for the same floor brokerage firm and thereby obtaining better prices for their personal trades.
The CFTC order further finds that Effron accepted, often at a loss, trades to assist the floor brokers to resolve errors they had made in handling customer orders such as by failing to fill an order at its price. According to the CFTC order, on occasion, Effron was repaid for losses he incurred accepting broker errors by brokers changing the execution price on customer trades to prices beneficial to Effron.
Effron, without admitting or denying the findings in the Commission's order, consented to the entry of a CFTC order:
Effron also agreed to cooperate with the Commission in any ongoing proceeding relating to this matter; and not to seek registration with the CFTC in any capacity for four years.