12 M$ penalty for forced 100 $ CL print

Discussion in 'Wall St. News' started by TraDaToR, Sep 22, 2010.

  1. TraDaToR


  2. JamesL


    Can Conagra appeal the fine even tho they did not dispute the charge? According to the article, the fine was in excess of what should have been levied.
  3. Haven't seen this, thanks for posting.

    It's typical misplaced aggression by the regulators - they need to find scapegoats for $100 oil, Optiver's marking the close incident comes to mind a few years ago.

    From the wording of the article it sounds like this clerk did a one lot at $100 in the pit while it was offered lower on Globex and was stupid enough to brag about it on a recorded line. Fine CAG a couple hundred grand and fire the guy, 12mm is retarded.
  4. bone

    bone ET Sponsor

    Having been an independent floor trader leasing a full membership I can tell you from first-hand experience that the quality and veracity of the prints is incredibly important.

    The NFA enforcement files are full of cases where people get fined, banned, sanctioned for bogus trades. There are cases where floor brokers intentionally printed false prices to fill customer orders into other brokers working the filling broker's spec account. Outright stealing.

    It was a fairly common occurence that when a price got printed that was hard to believe or any way in doubt, the floor brokers and the pit officials (called 'radio' in the bond pit) went crazy nuts to find out who actually traded that price. The brokers would actually stop quoting markets until the issue got resolved. Many of the prints actually got pulled.

    Reason? Because all of those brokers and their floor clerks are holding decks of orders that are triggered by price levels. Floor brokers will lose customers, lose jobs, get sued, all sorts of bad things - if an order does not get filled or gets filled because of a bogus price print. It is a very huge deal.

    So, in the scheme of things ConAgra got exactly what they deserved for the cuteness. And I'm sure that ConAgra's bank account and the nice roundness of that $100 figure really hurt their cause.

    IMO just another of the many reasons why for all it's foibles electronic trading is light years more compliant and ultimately fair than open outcry.
  5. spd


    Was this guy trying to trigger some stops or did he just really want to see a $100 print?
  6. Bone, point taken, but I think 12MM is excessive given there was apparently no intent to manipulate by way of marking the close or triggering orders in what was essentially a graveyard pit by late 2008 save for some volume in crude options.

    In pre-Globex/Access days this would be a different story.
  7. bone

    bone ET Sponsor

    The atrocious part to me was ConAgra owning a Nymex seat and running a floor desk. Some logical extension of the ethanol crush, perhaps?

    How many stop orders do you suppose were parked just North of $100?
  8. schizo


    Whether it was ConAgra or some other idiot, $100 was bound to get broken IMHO. Hell, I would have sent in my 1-lot order at $100.01 if I could, even if it were to come right back down.