On Thursday, the Commodities Futures Trading Commission (CFTC) filed charges against the?New York Mercantile Exchange Inc. and two of its former staff members for allegedly disclosing nonpublic information to an outside broker, reported Dow Jones.
CME Group Inc.(NASDAQ: CME) owns and operates the exchange.
Media reports have identified the staff as William Byrnes and Christopher Curtin. They had been responsible for moving customer transactions for clearing via the CME ClearPort electronic system.
For almost two years, they did so by disclosing material nonpublic information about the exchange, its customers and trades to the a commodity broker on several occasions. The broker did not have authorization to obtain the information.
CME responded to the allegations on Thursday. Here’s some of its statement.
The CFTC court action announced today is disappointing because it relates to incidents that CME Group has already?addressed and handled appropriately, and?involved no harm to any customer or the?markets.? Nevertheless, the CFTC is now seeking?to hold?NYMEX?liable for the actions of?these former employees, which?were?contrary to exchange policy and, when discovered, resulted in the?immediate termination by us of their employment.? NYMEX?is not being charged with any misconduct, is not being charged with a failure to properly supervise its employees, and is not being charged with a failure to adhere to the DCM core principles.? Rather,?the CFTC is seeking to impose a monetary penalty against NYMEX based solely on these former employees’ improper activities, even though no customer suffered any?loss and no third party obtained any improper gain.
When we learned of?instances?in which?NYMEX employees?provided information?to unauthorized third parties, for the purpose of providing business leads to those third parties, we?immediately terminated the employees who engaged in this conduct and reported that misconduct to the CFTC.??Although the information?disclosed was not and could not have been used to engage in insider trading or to otherwise affect the market in any way, nor did any customer suffer a financial loss resulting from these disclosures,?we took swift action?to make clear our commitment to protecting the confidentiality of any information concerning our customers.?We also?reinforced procedures and practices to protect against and detect such misconduct in the future.
We believe?the complaint against NYMEX?is neither justified as a matter of law nor consistent with the regulatory structure established by the Commodity Exchange Act.? For these reasons,?we have?determined that?we must oppose this case in court because we simply do not believe the CFTC’s claims?in this case are fair to NYMEX.? We are confident that the company will prevail on these claims.