The Bank of Montreal (BMO) now says it has lost as much as $615 million trading natural gas at Optionable Inc., the Valhalla, N.Y.-based energy brokerage, which is partially owned by Nymex Holdings Inc., parent of the Nymex.
Since the losses were discovered in May, BMO trader David Lee and Bob Moore, BMO executive managing director, have left the company, and Optionable’s Chief Executive Kevin Cassidy and Chairman Mark Nordlicht have resigned. Nymex Holdings, which finalized the $20 million purchase of a 19% stake in Optionable in April, also has removed Benjamin Chesir, who Nymex nominated to Optionable’s board of directors. In press statement Nymex said, “We are concerned about the recently announced developments at Optionable and are actively reviewing the situation. In order to avoid potential conflicts of interest during our review, we are resigning Nymex board representation effective today.”
Nymex has been roundly criticized for a lack of due diligence, considering that BMO accounted for roughly a quarter of Optionable’s volume, and because former Optionable CEO Kevin Cassidy had been convicted of tax evasion in 1993 and credit card fraud in 1997.
“Going forward, our efforts will include building a new board of directors to make crystal clear our commitment to the quality, integrity and profitability of Optionable,” said Albert Helmig, Optionable’s new executive chairman in a statement. “Our operations are continuing, trading operations are staffed and we are servicing our customers with brokerage services through our floor operations, voice brokerage business and OPEX trading platform.”