Former Bank of Montreal gas trader settles CFTC charges

A former Bank of Montreal natural gas trader will pay a $500,000 fine as part of an agreement settling charges that he mismarked and misvalued the bank’s gas options book and deceived the bank, the US Commodity Futures Trading Commission said.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Nov. 6 -- A former Bank of Montreal natural gas trader will pay a $500,000 fine as part of an agreement settling charges that he mismarked and misvalued the bank’s gas options book and deceived the bank, the US Commodity Futures Trading Commission said.

It said that David P. Lee also would be banned from any commodity-related trading under a consent order imposed by Judge George B. Daniels in US District Court for New York’s southern district on Nov. 6.

The order stemmed from CFTC’s Nov. 18, 2008, complaint that charged Lee with unlawfully mismarking his gas options positions between at least May 2003 and May 2007 and with misvaluing other gas options positions from October 2006 until May 2007. It also charged that Lee and various brokers deceived the Bank of Montreal by fabricating purportedly independent broker quotes delivered to the bank’s back office to verify prices.

The order found that this conduct violates antifraud and false reporting provisions of the Commodity Exchange Act and CFTC regulations, the federal commodities regulatory agency said. Litigation against four other named defendants in the case continues, it added.

Contact Nick Snow at nicks@pennwell.com.

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