Traders Face Racketeering, Fraud Counts
Sydney Morning Herald
Thursday August 3, 1989
Federal Bureau of Investigation director Mr William Sessions (left) and the Attorney-General of Illinois, Mr Dick Thornburgh, announce the indictment of 46 commodities brokers and traders on fraud charges at a news conference in Chicago on Tuesday.
The charges grew out of a two-year investigation of the United States' two largest commodities exchanges - the Chicago Board of Trade and the Chicago Mercantile Exchange.
As part of the inquiry, agents of the FBI infiltrated trading floors and secretly recorded members' conversations. Mr Thornburgh says the exchange members have been charged with a wide range of offences, including racketeering, mail fraud, commodities fraud, filing false tax returns, lying to Federal agents and conspiring to defraud the Internal Revenue Service.
"We are talking about hundreds of customers and thousands of trades," says Mr Anton Valukas, the US Attorney for the northern district of Illinois, who supervised the FBI's undercover investigation. "We are not talking about technical violations. It can be fairly described as wide-ranging activity."
There are more than 6,000 brokers and traders at the two exchanges.
Mr Valukas will not say how much money investors have lost because of the illegal trading but calls the amount "significant".
He says both individual and institutional investors have been cheated and that a number of defendants agreed to work with prosecutors in exchange for leniency.
"We do have substantial cooperation," Mr Valukas says.
Mr Thornburgh says the US Government's investigation are continuing. "This probe is part of an expanding Department of Justice crackdown on white-collar crime from Wall Street to Main Street with all stops in between," he says. "The activities uncovered at these exchanges, the largest of their type in the world, cannot be tolerated."
Mr Thornburgh emphasises that the indictments do not implicate either brokerage houses or the two exchanges.
Meanwhile, the chairman of the Board of Trade, Mr Karsten Mahlmann, has promised that the exchange will stick by its members.
The people charged this week will be permitted to continue trading until their trials end but brokers are being asked voluntarily not to fill customers' orders until their cases are resolved.
The exchange members, if convicted, face jail terms of up to 20 years and fines of up to $US250,000 ($A325,000).
© 1989 Sydney Morning Herald