CHICAGO COMMODITY CORP
CASE OUTCOME: FINE OF $75,000 Plus Other Orders

0086366

• DAVID MICHAEL BRESLOW
• ROSS A CIARAMELLA
• COMMODITY OPTION SPECIALISTS INC
• SUZANNE THERESA CONBOY
• MURRAY P FELSEN
• MARSHA ELEANOR FRIEDMAN
• GERALD DAVID GOLDER
• MAX GOLDSTEIN
• KENNETH R GROSSFELD
• JAMES RICHARD KUHFAHL
• WAYNE MICHAEL MAROV
• MINDY LISA MILLMAN
• CLIVE FREDERICK NEWMAN
• MARTIN DAVID SACHS
• BARRY KEITH SHANE
• MURRAY L STEIN

Complaint:
ON JUNE 2, 1988, THE CENTRAL REGIONAL BUSINESS CONDUCT COMMITTEE ISSUED A COMPLAINT AGAINST CHICAGO COMMODITY CORPORATION ("CCC"), KENNETH R. GROSSFELD ("GROSSFELD"), BARRY KEITH SHANE ("SHANE"), ROSS A. CIARAMELLA ("CIARAMELLA"), GERALD DAVID GOLDER ("GOLDER"), MURRAY P. FELSEN ("FELSEN"), WAYNE M. MAROV ("MAROV"). CLIVE FREDERICK NEWMAN ("NEWMAN"), MAX GOLDSTEIN ("GOLDSTEIN"),

SUZANNE THERESA CONBOY ("CONBOY"), MURRAY L. STEIN ("STEIN"), JAMES RICHARD KUHFAHL ("KUHFAHL"), MARSHA ELEANOR FRIEDMAN ("FRIEDMAN"), DAVID MICHAEL BRESLOW ("BRESLOW"), MINDY L. LINK A/K/A MINDY MILLMAN ("MILLMAN"), MARTIN DAVID SACHS ("SACHS"), AND COMMODITY OPTION SPECIALISTS, INC. ("COSI"). THE COMPLAINT ALLEGES THAT CCC, SHANE, CIARAMELLA, MAROV, NEWMAN, GOLDSTEIN, CONBOY, STEIN, KUHFAHL, MILLER

AND GOLDER VIOLATED NFA COMPLIANCE RULE 2-2(A) AND 2-29(A)(1) BY CHEATING, DEFRAUDING, OR DECEIVING, OR ATTEMPTING TO CHEAT, DEFRAUD OR DECEIVE COMMODITY FUTURES CUSTOMERS AND BY MAKING COMMUNICATIONS WITH THE PUBLIC WHICH OPERATE AS A FRAUD OR A DECEIT, THAT CCC, SHANE, CIARAMELLA, GOLDSTEIN, CONBOY, STEIN, KUHFAHL, BRESLOW, FRIEDMAN, MILLMAN AND SACHS VIOLATED NFA COMPLIANCE RULE 2-29(A)(2) BY EMPLOY- ING A HIGH-PRESSURE APPROACH WITH THE PUBLIC; THAT CCC VIOLATED NFA COMPLIANCE RULE 2-30(A) BY FAILING

TO GIVE REQUIRED RISK DISCLOSURE; AND THAT CCC AND NEWMAN VIOLATED NFA COMPLIANCE RULE 2-30(A) BY SUGGESTING OR IN- DUCING THAT CUSTOMERS FALSIFY INFORMATION REGARDING INCOME, NET WORTH AND EMPLOYMENT. THE COMPLAINT FURTHER ALLEGES THAT CCC, MILLMAN, SHANE, CIARAMELLA AND FELSEN VIOLATED NFA COMPLIANCE RULE 2-4 BY FAILING TO OBSERVE HIGH STANDARDS OF COMMERCIAL HONOR AND JUST AND EQUITABLE PRINCIPLES OF TRADE IN THE CONDUCT OF THEIR COMMODITY FUTURES BUSINESS; AND THAT ALL OF THE RESPONDENTS, WITH THE EXCEPTION OF SACHS, VIOLATED NFA COMPLIANCE RULE 2-29 BY USING DECEP- TIVE, MISLEADING AND UNBALANCED PROMOTIONAL MATERIAL. THE COMPLAINT ALSO ALLEGES THAT CCC VIOLATED NFA COMPLIANCE RULE 2-29 BY FAILING TO DEMONSTRATE THE ACCURACY OF NUMERICAL OR STATISTICAL INFORMATION CONTAINED IN PROMOTIONAL MATERIAL, AND BY FAILING TO FILE COPIES OF ALL PROMOTIONAL MATERIAL WITH NFA PROMPTLY AFTER ITS FIRST USE; NFA COMPLIANCE RULE 2-9 BY FAILING TO DILIGENTLY SUPERVISE EMPLOYEES AND AGENTS IN THE CONDUCT OF THEIR COMMODITY FUTURES ACTIVITIES ON BEHALF OF THE MEMBER; NFA COMPLIANCE RULE 2-26 BY GUARAN- TEEING PROFITS TO CUSTOMERS; AND NFA BYLAW 305, SCHEDULE A, SECTION I(B) BY FAILING TO LIST ALL PRINCIPALS ON REGIS- TRATION FORMS. THE COMPLAINT FINALLY ALLEGES THAT COSI IS LIABLE FOR THE VIOLATIONS BY CCC OF NFA RULES AND REGULA- TIONS OCCURRING SUBSEQUENT TO SEPTEMBER 1, 1987, WHICH INCLUDE: NFA COMPLIANCE RULE 2-2(A), 2-29(A)(1), 2-29(A)(2), 2-30(A), 2-4, 2-29(B)(1), (2), (3) AND (6), 2-29(F), 2-9 AND NFA BYLAW 305, SCHEDULE A, SECTION I(D).

Decision:
DECISION - CHICAGO COMMODITY CORP., COMMODITY OPTION SPECIALISTS, INC., KENNETH R. GROSSFELD:

ON AUGUST 4, 1988, THE CENTRAL COMMITTEE ISSUED A DECISION IN WHICH IT ACCEPTED THE OFFER OF SETTLEMENT OF CCC, COSI AND GROSSFELD IN WHICH CCC, COSI AND GROSSFELD NEITHER ADMITTED NOR DENIED THE ALLEGATIONS OF THE COMPLAINT. THE DECISION REQUIRES THAT CCC AND COSI PAY A FINE OF $75,000, FOR WHICH THEY ARE JOINTLY AND SEVERALLY LIABLE, AND THAT GROSSFELD PAY A FINE OF $10,000. THE DECISION ALSO REQUIRES THAT, WITHIN 60 DAYS OF THE DATE OF THIS DECISION, CCC SUBMIT TO NFA A SOLICITATION GUIDELINE THAT ADDRESSES THE REQUIREMENTS OF NFA COMPLIANCE RULE 2-29 AND WHICH WILL BE INCORPORATED INTO CCC'S TRAINING PROGRAM AND INTO CCC ASSOCIATED PERSONS' ("AP") PRESENTATIONS. THE DECISION FURTHER REQUIRES CCC TO HIRE A CONSULTANT WHO WILL MONITOR THE TELEPHONE SOLICITATIONS OF CCC'S APS FOR A PERIOD OF 8 MONTHS, PREPARE A WRITTEN REPORT ON A MONTHLY BASIS OF ANY QUESTIONABLE SALES SOLICITATIONS, WHICH REPORTS AND CCC'S RESPONSES TO THE REPORTS WILL BE SUBMITTED TO NFA, AND CONTINUE TO CONDUCT ONGOING TRAINING PROGRAMS TO INFORM ALL APS OF CCC OF ALL RELEVANT NFA COMPLIANCE RULES. THE DECISION FINALLY REQUIRES THAT CCC NOTE IN ITS INFORMATIONAL PACKAGE MAILED TO PROSPECTIVE CUSTOMERS THE AVAILABILITY OF AN NFA BROCHURE ENTITLED "BUYING OPTIONS ON FUTURES CONTRACTS," AND MAIL THE BROCHURE TO ANYONE WHO RESPONDS TO SUCH NOTICE. THE DECISION STATES THAT THE SETTLEMENT OFFER, DECISION, COMPLAINT AND THE UNDERLYING FACTS MAY NOT BE USED BY NFA AS THE SOLE BASIS TO REVOKE, DENY, LIMIT OR CONDITION CCC'S, COSI'S AND GROSSFELD'S, PRESENT OR FUTURE MEMBERSHIP WITH NFA, OR THEIR PRESENT OR FUTURE REGISTRATION WITH THE COMMODITY FUTURES TRADING COMMISSION.

Source: National Futures Association

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