New York Court Imposes $500,000 Fine and Other Sanctions Against David P. Lee, Former Natural Gas Trader for Bank of Montreal
Lee settles CFTC charges of mis-marking and mis-valuing the Bank’s natural gas options book to exaggerate trading profitability; court also bans Lee from commodity-related trading.
Washington, DC — The Commodity Futures Trading Commission (CFTC) today announced that it has entered into a consent order settling charges brought against David P. Lee of New Jersey, a former trader for the Bank of Montreal (BMO), for mis-marking and mis-valuing BMO’s natural gas options book and deceiving the bank (see CFTC Press Release 5571-08, November 18, 2008).
Judge George B. Daniels of the U.S. District Court for the Southern District of New York entered an order on November 5, 2009, requiring Lee to pay a $500,000 civil monetary penalty. The order also permanently bans Lee from any commodity-related trading.
The order stems from the CFTC’s complaint filed on November 18, 2008, that charged Lee with unlawfully mis-marking his natural gas options positions between at least May 2003 and May 2007 and with mis-valuing other natural gas options positions from October 2006 until May 2007. Further, the complaint charged that Lee and various brokers deceived BMO by fabricating purportedly independent broker quotes delivered to BMO’s back office for price verification. The order found that this conduct violates anti-fraud and false reporting provisions of the Commodity Exchange Act (CEA) and CFTC regulations. The CFTC’s litigation against other named defendants continues.
The CFTC thanks the Manhattan District Attorney’s Office, the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Southern District of New York for their assistance.
The following CFTC staff members are responsible for this case: Joan Manley, Christine Ryall, Eugene Smith, Patricia Gomersall and Paul Hayeck.
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