CME Sued by CFTC for Disclosing Non-Public Information

CME Group Inc., owner of the world’s largest futures exchange, and two former employees were sued by the U.S. Commodity Futures Trading Commission for disclosing material non-public information on customer trades.

William Byrnes and Christopher Curtin, who worked for CME’s New York Mercantile Exchange, broke the law by revealing nonpublic information to an outside commodity broker between February 2008 and September 2010, the CFTC said in a lawsuit filed today in federal court in Manhattan.

The information included identities of buyers and sellers, the number of contracts traded, the prices paid and the trading strategies of participants, the CFTC said in the suit. The CFTC is seeking monetary penalties from each defendant and a finding that CME’s Nymex is liable for their conduct. The agency is also seeking to bar them from participation in commodities trading.

“The CFTC court action announced today is disappointing because it relates to incidents that CME Group has already addressed and handled appropriately, and involved no harm to any customer or the markets,” the CME Group said in an e-mail statement. “Nevertheless, the CFTC is now seeking to hold Nymex liable for the actions of these former employees, which were contrary to exchange policy and, when discovered, resulted in the immediate termination by us of their employment.”

Phone Calls

Nymex, responding to a complaint from a market participant in 2009, reviewed a day’s worth of phone calls and e-mails involving Byrnes, who knowingly and willingly disclosed nonpublic information on at least 60 occasions from about February 2008 to September 2010, the CFTC said in the complaint.

“CME Nymex never questioned Byrnes concerning the complaint or took any additional steps designed to determine whether Byrnes had been engaged in such egregious misconduct,” the CFTC said. Byrnes’s conduct continued until about December 2010, when he was terminated, the agency said.

Curtin knowingly and willfully disclosed nonpublic information about trades on at least 16 occasions between May 2008 and March 2009, the CFTC said. He voluntarily resigned from CME to take another job in the futures industry in or about April 2009, according to the complaint.

Christopher Curtin now works at ELX Futures LP in New York, according to a person familiar with the matter who asked not to be named. Calls to Curtin’s office weren’t returned. Contact information for Byrnes wasn’t immediately available.

“Those who run exchanges and profit from trading need to be responsible custodians of the information and for their employees actions related to sensitive data,” CFTC Commissioner Bart Chilton said in an interview today.

The case is U.S. Commodity Futures Trading Commission v. Byrnes, 12-cv-1174, U.S. District Court, Southern District of New York (Manhattan).

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