WASHINGTON, D.C. – Former Chicago Mercantile Exchange (CME) member Kevin McCormick was charged with false reporting and trading violations by the U.S. Commodity Futures Trading Commission (CFTC) on September 30, 2010. The CFTC alleged McCormick knowingly submitted false and fictitious commodity futures transactions to conceal trading losses.
The agency’s order detailed that from September 10, 2004, through October 18, 2004, McCormick’s trading account at Spike Trading Inc. maintained a negative balance. To hide this from the CME, McCormick falsified entries on his trading cards, misrepresenting the price and quantity of his S&P 500 futures trades. This inflated the reported equity in his account, allowing him to continue trading without meeting required margin requirements.
According to the CFTC, McCormick’s scheme lasted roughly six weeks, ending on October 18, 2004, when he failed to submit trading cards. When his trades were finally cleared on October 19, 2004, his account revealed a significant short position in S&P contracts, resulting in a debit balance of approximately $386,000, an amount he was unable to cover. The losses were ultimately borne by his clearing firm.
The order mandates that McCormick immediately cease and desist from making further false reports. He is permanently prohibited from trading commodity futures and from applying for or engaging in any activity requiring registration as a commodity futures professional with the CFTC. McCormick faces a lifetime ban from the industry as a result of the settlement.
The case was led by CFTC Division of Enforcement staff including Diane M. Romaniuk, Mary Elizabeth Spear, Ava M. Gould, Scott R. Williamson, Rosemary Hollinger and Richard B. Wagner.
Source: CFTC.gov
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