Former CME Clerk Convicted of Commodities Fraud for Manipulating Trades to Profit More Than $200,000
|U.S. Attorney’s Office March 17, 2014|
CHICAGO—A former clerk for a lean hogs futures trader was convicted of commodities fraud for manipulating trades to profit more than $200,000 for herself to the detriment of public customers, federal law enforcement officials announced today.
The defendant, Nicole M. Graziano, 33, of Addison and formerly of Roselle, was found guilty of four counts of commodities fraud on Friday following a four-day bench trial before U.S. District Judge James Zagel in federal court.
Graziano’s scheme resulted in an “almost unbelievable success rate” of 90 to 100 percent of winning trades for her own account, which would have been impossible in an ordinary market setting, Judge Zagel said in delivering his verdict. Graziano faces a maximum penalty of 10 years in prison and a $1 million fine on each count. Judge Zagel set sentencing on June 25.
According to the evidence, Graziano, who was a clerk for a member broker at the Chicago Mercantile Exchange, now CME Group, secretly inserted order tickets for her own personal orders into the decks of tickets submitted by public customers. She provided the tickets and trade cards to brokers to execute during the closing bracket of trading in lean hogs futures contracts. Using her position as a clerk, Graziano fraudulently allocated favorable prices to her own trades (giving herself low prices for buy orders and high prices for sell orders) and reaped profits to the detriment of public customers. Between September 2009 and August 2010, Graziano submitted at least 89 fraudulent trade cards to the appropriate clearing firms, resulting in $213,680 in illegal profits to her during the closing bracket.
Judge Zagel said that the scheme damaged “the legitimacy of the exchange itself” and hurt customers because she took away benefits that could have gone to them for her own advantage.
The verdict was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The CME Group assisted in the investigation.
The government is being represented by Assistant U.S. Attorneys Christopher R. McFadden and Tiffany McCormick.