September 30, 2010
CFTC Imposes Permanent Trading Ban on Kevin McCormick for Submitting Trading Cards with Fictitious Commodity Futures Trades
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today simultaneously filed and settled charges against Kevin McCormick, a former member of the Chicago Mercantile Exchange (CME) and a former floor trader in the Standard & Poor’s 500 Stock Price Index (S&P) futures pit. The CFTC charged McCormick with knowingly recording and submitting false and fictitious commodity futures transactions on his trading cards to conceal trading losses for a period of several weeks. McCormick’s clearing firm had to cover trading losses McCormick incurred by the time his scheme unraveled.
The CFTC order, entered on September 30, 2010, finds that, from September 10, 2004 through October 18, 2004, McCormick’s trading account at Spike Trading Inc. carried a negative balance. To conceal his negative balance from the CME, McCormick made entries on his trading cards that misrepresented the price and/or quantity of his S&P trades and inflated the reported equity in his trading account.
The order further finds that McCormick submitted these false and fictitious trading cards for clearing, knowing that the reported transactions created the appearance that he had realized trading profits. The false reporting allowed McCormick to trade without posting the required margin and placed his clearing firm at risk.
McCormick’s false reporting scheme continued for approximately six weeks, until he failed to submit some of his trading cards on October 18, 2004. According to the order, when McCormick’s trades were cleared on October 19, 2004, his account had a significant short position of S&P contracts that, when liquidated, resulted in his account having a debit balance of approximately $386,000, an amount which he could not cover.
The order requires McCormick to cease and desist from making further false reports and permanently prohibits him from trading commodity futures and ever applying for or engaging in any activity requiring registration as a commodity futures professional with the CFTC.
The following CFTC Division of Enforcement staff are responsible for this case: Diane M. Romaniuk, Mary Elizabeth Spear, Ava M. Gould, Scott R. Williamson, Rosemary Hollinger and Richard B. Wagner.
Last Updated: September 30, 2010