Chicago, IL – April 22, 2010 – Carmine Garofalo, an Italian citizen, has been charged with options fraud and engaging in fictitious trades by the U.S. Commodity Futures Trading Commission (CFTC). The charges stem from alleged unlawful activity involving E-mini S&P 500 and Euro/U.S. Dollar European Style Premium option contracts on the Chicago Mercantile Exchange (CME).
According to the CFTC complaint filed on April 20, 2010, in the U.S. District Court for the Northern District of Illinois, Garofalo fraudulently accessed an account belonging to a Luxembourg-based investment fund. Without authorization, he allegedly executed trades that resulted in losses for the fund, while simultaneously profiting his personal account.
The CFTC alleges Garofalo engaged in a scheme involving non-competitive, fictitious trades between his personal account and the investment fund’s account on March 5, 2010. This activity reportedly netted Garofalo more than $614,000 in illicit gains, with the corresponding amount lost by the investment fund.
Judge Ronald Guzman issued a restraining order on the same day the complaint was filed, freezing Garofalo’s assets and preventing him from destroying documents or denying access to records for CFTC staff. A hearing on the CFTC’s motion for a preliminary injunction is scheduled for April 29, 2010.
The CFTC is seeking disgorgement of Garofalo’s ill-gotten gains, restitution for the investment fund, civil monetary penalties, a ban on future trading and registration, and a permanent injunction to prevent further violations of federal commodities laws. The CME Group, Inc. and Interactive Brokers, LLC assisted the CFTC in this investigation.
Source: CFTC.gov
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