Release: 4317-99 (CFTC Docket 99-17)

For Release: September 30, 1999

CFTC FILES ENFORCEMENT ACTION CHARGING THAT FLOOR BROKER CONSTANTINE
    MITSOPOULOS COMMITTED FRAUD WHILE HANDLING CUSTOMER ORDERS

The CFTC's Action Further Alleges That Mitsopoulos, Margaret
    Dull, Lisa Budicak, and Richard Marisie Violated Order-Taking and
    Recordkeeping Requirements In Preparing Customer Orders And That
    Mitsopoulos Failed to Supervise Diligently Phone Clerks Who Worked For
    Him

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced
    today the filing of a four-count administrative complaint against Constantine Mitsopoulos of Lake Forest, Illinois, alleging that
    Mitsopoulos committed fraud while handling customer orders. The CFTC's
    complaint also alleges that Margaret Dull, Lisa Budicak, and Richard
    Marisie violated order-taking and recordkeeping requirements.
    Mitsopoulos is also charged with order-taking and recordkeeping violations
    and failing to supervise diligently Dull, Budicak, and Marisie.

The charges against Mitsopoulos, a registered floor broker, and Dull,
    Budicak, and Marisie, phone clerks who worked for Mitsopoulos, arise out of
    an alleged fraudulent trade allocation scheme undertaken by a registered
    introducing broker (the IB) over an approximate two-year period. From at
    least January 1994 through December 1995, the complaint alleges, the IB
    entered orders for thousands of treasury bond futures and options contracts
    per day for its customers through Mitsopoulos' floor desk at Refco,
    Inc. on the Chicago Board of Trade and, for a substantial number of the
    orders, did not provide account identification until after the trades were
    executed. As a result, it is alleged, the IB was able to allocate trades at
    better prices to certain customer accounts and trades at worse prices to
    other customer accounts. As further alleged, the IB also allocated trades
    by instructing one of the phone clerks to transfer executed and already
    assigned trades from one customer account to another by changing the
    account numbers on the executed trades.

The complaint alleges that Mitsopoulos routinely allowed the IB to delay
    giving account numbers for trades until after they were executed and to
    transfer trades between customer accounts after the trades were executed.
    By such actions, the complaint alleges, Mitsopoulos committed fraud by
    breaching his duty to pursue the best possible price for customers, failing
    to inform customers that he routinely accepted orders from the IB without
    account identification, and allowing trades to be moved from one account to
    another after execution, in violation of sections 4b and 4c(b) of the
    Commodity Exchange Act (CEA) and CFTC regulation 33.10.

The CFTC complaint further alleges that Mitsopoulos, Dull, Budicak, and
    Marisie violated CFTC order-taking and recordkeeping requirements by not
    placing account identification on order tickets immediately upon receipt of
    the orders from the IB in violation of section 4g of the CEA and CFTC
    regulation 1.35(a-1)(2). Mitsopoulos is also charged with violating
    regulation 166.3 by failing to supervise diligently the activities of Dull,
    Budicak, and Marisie and failing to design, implement, monitor, and follow
    a program of supervision and compliance designed to detect and deter
    violations of the CEA and CFTC regulations.

On May 24, 1999, the CFTC filed and settled a related action against Refco, Inc. charging order-taking and recordkeeping violations and a
    failure to supervise, arising out of the above-described trade allocation
    scheme. Refco was ordered to pay $7 million, to cease and desist from
    further violations, and to conduct an internal review of its compliance
    polices and procedures (see CFTC News Release #4269-99, May 24, 1999).

A public hearing has been ordered to determine if the charges in the
    complaint are true, and, if so, what sanctions, if any, are appropriate and
    in the public interest. Possible sanctions include an order directing the
    respondents to cease and desist from violating federal commodity law (the
    CEA), civil monetary penalties of not more than the higher of $100,000 or
    triple the monetary gain for each violation, and restitution of the damages
    proximately caused by the violations of the CEA.

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