Jump to navigation

Free Newsletter Modern Trader Follow

Main menu

  • Futures
    • Modern Trader Magazine
    • Commodities
    • Futures Mag Archives
    • ETFs
    • Financials
    • Forex
    • Managed Funds
    • Market Analysis
    • News
    • Options
    • Regulation
    • Technology
    • Trading Strategies
    • Education
    • Futures Op-Ed
  • Favorites
    • Alpha Pages Most Popular
    • Futures Magazine
    • Modern Trader Magazine
    • Most Popular
    • Slideshows & Lists
    • Special Topics
      • Alpha Hunters
      • Bad Boys
      • FINtech
      • High-Frequency Trading
      • Trader's Life
      • Trading Strategies
      • FUTURES MAG's 500th ISSUE
      • We asked traders
  • Traders
    • Market Data
    • Hot Charts
    • Interactive Charts
    • Trading Calendar
  • FINalternatives
  • Hard Assets
    • Home
    • Base Metals
    • Precious Metals
    • Rare Earth Metals
    • Commodities
    • Mining Investments
    • Slideshows
  • Modern Trader
    • Subscribe
    • Past Issues
  • All +
    • Follow Us +
      • FuturesMag
      • Newsletters
      • Facebook
      • Google+
      • Linkedin
      • Twitter
      • RSS Feeds
    • About Us +
      • About
      • Advertise
      • Contact
      • Contribute
      • Privacy Policy
  • !
Follow Futures          
       
more >>

We Asked Traders

We asked traders for their opinion on the launch of bitcoin futures

Sponsored Content

Trading

Equities.com launches unlimited trading via Tradier Brokerage, Transforming into a news & fintech portal

Featured Topics

more Commodities>>

Commodities

Energy demand steps back in play
Advertisement
more Volatility>>

Volatility

Volatility & opportunity in the energy sector
Daily Price Action: E-mini S&P 500
more Options>>

Options

Trading Vertical Option Spreads

Advertisement

CFTC sanctions Gelber Group LLC $750,000 for trading abuses

Former Gelber trading manager also fined $200,000

By Press Release

February 8, 2013 • Reprints

The following is from the CFTC...

The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against Gelber Group, LLC (Gelber) of Chicago, Ill., for reporting orders during pre-opening trading sessions that Gelber had no intention of executing. The CFTC also settled charges against both Gelber and former Gelber trading manager Martin A. Lorenzen for engaging in wash sales. The CFTC Orders require Gelber and Lorenzen to pay a civil monetary penalty of $750,000 and $200,000, respectively, and order the Respondents to cease and desist from violating the Commodity Exchange Act (CEA) and CFTC regulation 1.38, as charged.

Gelber’s False Reports of Orders in the Pre-Open Session

The CFTC Order against Gelber finds that from at least August 20, 2009 to February 16, 2010, a Gelber proprietary trader reported false orders in the pre-opening session of the NASDAQ E-mini 100 futures contract on the Chicago Mercantile Exchange’s (CME) Globex electronic trading platform. The orders were false because they were not intended to be executed and, in fact, were cancelled before the market opened. These orders caused non-bona fide prices in the indicative opening price (IOP) for the NASDAQ E-mini 100 futures contract, which is the price at which the contract is expected to trade at the opening of trading. The CME broadcasts the IOP to other Globex users and to publishers of financial data who purchase and disseminate the IOP information to the public. Gelber violated provisions of the CEA that prohibit false reporting and causing non-bona fide prices to be reported, registered, or recorded.

Gelber and Lorenzen’s Illegal Wash Sales

The CFTC Orders also separately find that at least between March 2010 and August 2010, two Gelber proprietary traders engaged in wash sales in certain Russell Index futures contracts at the direction of their manager, Lorenzen, in order to inflate Gelber’s trading volumes and enable it to obtain increased rebates from the IntercontinentalExchange (ICE) as part of an ICE incentive program, the Russell Member Fee Program.

Under the terms of the incentive program, ICE agreed to rebate fees to traders on all Russell Index futures contracts (including the actively traded Russell 2000 futures contract) if the program participant traded pre-determined volumes of contracts in some thinly traded Russell 1000 Index contracts on a monthly basis – specifically, the Russell 1000 Index Mini, the Russell 1000 Growth Index and the Russell 1000 Value Index futures contracts (Russell 1000 contracts), according to the Orders.

In early 2010, the Gelber executive who arranged Gelber’s participation in the incentive program asked Lorenzen to select two traders to trade the Russell 1000 contracts and provided them with the specific volumes of contracts they had to trade to make Gelber eligible for the rebates. The two traders had difficulty trading the necessary volume profitably because of the thinness of the Russell 1000 market. Lorenzen, therefore, resorted to instructing them to engage in unlawful wash sales and trade opposite each other until they reached the necessary volume. Moreover, rather than rely solely on manual wash sales to get the rebates, Lorenzen directed a Gelber programmer to create a computer program that would automatically enter matching orders from each trader’s computer. The two traders used the computer program each month during the relevant period and executed wash sales repeatedly in the Russell 1000 contracts, according to the orders.

CFTC Division of Enforcement staff responsible for this matter are David Terrell, Heather Johnson, Joseph Konizeski, Scott R. Williamson, Rosemary Hollinger, and Richard Wagner.

About the Author

Related Articles
Daily Price Action: E-mini S&P 500
Daily Price Action: E-mini S&P 500
Daily Price Action: E-mini S&P 500
Daily Price Action: E-mini S&P 500
Daily Price Action: E-mini S&P 500
Previous
A new kind of job market
Next
Stock market trend still positive although indicators waning
Related Terms
Nasdaq 1150cftc 938U.S. Commodity Futures Trading Commission 658Illinois 599CFTC Division of Enforcement 152Emini 122Richard Wagner 65Rosemary Hollinger 64Joseph Konizeski 13Scott R. Williamson 12Heather Johnson 10David Terrell 5gelber 1lorenzen 1Gelber Group LLC 1Martin A. Lorenzen 1

Free Newsletter Modern Trader Follow

Main menu

  • Futures
    • Modern Trader Magazine
    • Commodities
    • Futures Mag Archives
    • ETFs
    • Financials
    • Forex
    • Managed Funds
    • Market Analysis
    • News
    • Options
    • Regulation
    • Technology
    • Trading Strategies
    • Education
    • Futures Op-Ed
  • Favorites
    • Alpha Pages Most Popular
    • Futures Magazine
    • Modern Trader Magazine
    • Most Popular
    • Slideshows & Lists
    • Special Topics
      • Alpha Hunters
      • Bad Boys
      • FINtech
      • High-Frequency Trading
      • Trader's Life
      • Trading Strategies
      • FUTURES MAG's 500th ISSUE
      • We asked traders
  • Traders
    • Market Data
    • Hot Charts
    • Interactive Charts
    • Trading Calendar
  • FINalternatives
  • Hard Assets
    • Home
    • Base Metals
    • Precious Metals
    • Rare Earth Metals
    • Commodities
    • Mining Investments
    • Slideshows
  • Modern Trader
    • Subscribe
    • Past Issues
  • All +
    • Follow Us +
      • FuturesMag
      • Newsletters
      • Facebook
      • Google+
      • Linkedin
      • Twitter
      • RSS Feeds
    • About Us +
      • About
      • Advertise
      • Contact
      • Contribute
      • Privacy Policy
  • !
images