May 30, 2013

Federal Court in New York Imposes a $1 Million Fine and other Sanctions against Kevin Cassidy, Former CEO of Optionable Inc.

Cassidy settles CFTC charges of defrauding the Bank of Montreal

Washington, DC — The Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court order requiring Defendant Kevin Cassidy, formerly of Bedford Hills, New York, former CEO of Optionable Inc., to pay a $1 million civil monetary penalty for violating the anti-fraud provisions of the Commodity Exchange Act (CEA) and CFTC Regulations. The order was entered on May 28, 2013, by the Honorable George B. Daniels of the U.S. District Court for the Southern District of New York.

The Order stems from a CFTC Complaint filed on November 18, 2008 (see CFTC Press Release 5571-08). The Complaint charged David P. Lee, a former trader for the Bank of Montreal (BMO), for mis-marking and mis-valuing BMO’s natural gas options book and deceiving BMO and charged Lee and Cassidy for deceiving BMO, from 2003 through April 2007, by fabricating purportedly independent broker quotes delivered to BMO’s back office for price and skew verification.

Previously, on April 30, 2012, Judge Daniels entered an Amended Partial Consent Order for Permanent Injunction and Other Equitable Relief finding that Cassidy violated Section 4c(b) of the Act, 7 U.S.C. § 6c(b) (2002), and CFTC Regulations 33.10 (a)-(c), 17 C.F.R. § 33.10 (a)-(c) (2008). The Amended Partial Consent Order also imposed permanent trading and registration bans on Cassidy and prohibited him from violating the CEA, as charged.

In relation to the same underlying conduct, in August 2011 Cassidy entered a plea of guilty in the Southern District of New York to one criminal count of conspiracy. In April 2012, Cassidy was sentenced to 30 months imprisonment followed by three years of supervised release.

Defendant Lee settled the CFTC action against him in November 2009 (see CFTC Press Release 5745-09, November 6, 2009). In November 2008, in the Southern District of New York, Lee entered a plea of guilty to four criminal counts: Conspiracy to Commit Wire Fraud and to Make False Bank Entries, Wire Fraud, False Statements to a Bank, and Obstruction of Justice. Lee has not yet been sentenced.

Defendant Robert Moore settled the CFTC’s litigation on March 8, 2010 (see CFTC Press Release 5788-10).

The CFTC thanks the Manhattan District Attorney’s Office, the Federal Bureau of Investigation, and the U.S. Attorney’s Office for the Southern District of New York for their assistance.

CFTC staff members are responsible for this case are Christine Ryall, Eugene Smith, Patricia Gomersall, Joan Manley, and Paul Hayeck.

Last Updated: May 30, 2013