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CHILMARK COMMODITIES CORP
CASE OUTCOME: EXPELLED FROM MEMBERSHIP
• FINE of $50000
• CEASE AND DESIST
NFA ID:
0177592
Individuals Involved:
- CARROLL, EDMUND JOSEPH
- ANDREW WILLIAM GOETZ
- VINCENT F MALFA
- ROBERT MISHELOW
- SHERMAN JOHN MORTENSON
- CHRISTOPHER M NADLER
- EUGENE JAMES NEMETH
- JENS WALLRABE
ON MAY 2, 1988, THE EASTERN REGIONAL BUSINESS CONDUCT COMMITTEE ("EASTERN COMMITTEE") ISSUED A TEN-COUNT COMPLAINT AGAINST CHILMARK COMMODITIES CORPORATION ("CHILMARK") AND SIX OF CHILMARK'S ASSOCIATED PERSONS, EUGENE JAMES NEMETH ("NEMETH"), ROBERT MISHELOW ("MISHELOW"), JENS WALLRABE ("WALLRABE"), ANDREW WILLIAM GOETZ ("GOETZ"), EDMUND JOSEPH CARROLL ("CARROLL") AND VINCENT F. MALFA ("MALFA"). COUNT ONE OF THE COMPLAINT ALLEGES THAT CHILMARK, NEMETH, MISHELOW AND WALLRABE VIOLATED NFA COMPLIANCE RULE 2-2 BY CHEATING, DEFRAUDING OR DECEIVING OR ATTEMPTING TO CHEAT, DEFRAUD OR DECEIVE COMMODITY FUTURES CUS- TOMERS AND BY WILLFULLY SUBMITTING MATERIALLY FALSE OR MISLEADING INFORMATION TO NFA. SHERMAN J. MORTENSON ("MORTENSON"), WHO IS ALLEGED TO HAVE BEEN ACTING AS AN UNREGISTERED ASSOCIATED PERSON OF CHILMARK, IS CHARGED WITH HAVING BEEN A CAUSE OF CERTAIN OF THE VIOLATIONS ALLEGED IN COUNT ONE. COUNT TWO OF THE COMPLAINT ALLEGES THAT CHILMARK, NEMETH, MISHELOW, WALLRABE, GOETZ AND CARROLL VIOLATED NFA COMPLIANCE RULE 2-29(A) BY MAKING FRAUDULENT AND DECEPTIVE COMMUNICATIONS WITH THE PUBLIC. COUNT TWO ALSO ALLEGES THAT CHILMARK AND MISHELOW FURTHER VIOLATED NFA COMPLIANCE RULE 2-29(A) BY EMPLOYING HIGH-PRESSURE SALES TACTICS AND THAT CHILMARK AND WALLRABE VIOLATED NFA COMPLIANCE RULE 2-29(B) BY USING DECEPTIVE PROMOTIONAL MATERIAL. MORTENSON IS ALLEGED TO HAVE BEEN A CAUSE OF CERTAIN OF THE ALLEGED VIOLATIONS IN COUNT TWO. THE REMAINING COUNTS OF THE COMPLAINT ALLEGE THAT CHILMARK VIOLATED NFA COMPLIANCE RULE 2-9 BY FAILING TO DILIGENTLY SUPERVISE EMPLOYEES AND AGENTS IN THE CONDUCT OF THEIR COMMODITY FUTURES ACTIVITIES; VIOLATED NFA FINANCIAL REQUIREMENTS SECTION 9 BY FAILING TO MAINTAIN REQUIRED MINIMUM NET CAPITAL AND BY FAILING TO GIVE TELEGRAPHIC NOTICE; VIOLATED NFA COMPLIANCE RULE 2-10 BY FAILING TO MAINTAIN ADEQUATE BOOKS AND RECORDS NECESSARY AND APPROPRIATE TO CONDUCT BUSINESS; VIOLATED NFA COMPLIANCE RULE 2-8 BY FAILING TO MAINTAIN AN ACCURATE LIST OF DISCRETIONARY ACCOUNTS, FAILING TO IDENTIFY DISCRETIONARY ORDERS AS SUCH, AND FAILING TO ADOPT AND ENFORCE WRITTEN REVIEW PROCEDURES REGARDING DISCRETIONARY TRADING; VIOLATED NFA COMPLIANCE RULE 2-30 BY FAILING TO OBTAIN AND RECORD CUSTOMER INFORMATION; AND VIOLATED NFA BYLAW 301(B) BY ALLOWING THE SOLICITATION OF CUSTOMERS BY AN UNREGISTERED PERSON WHO WAS REQUIRED TO BE REGISTERED AS AN NFA ASSOCIATE. MORTENSON IS ALLEGED TO HAVE BEEN THE CAUSE OF THIS LAST VIOLATION. ONE COUNT OF THE COMPLAINT ALSO CHARGES CHILMARK'S PRESIDENT, CHRISTOPHER M. NADLER, WITH HAVING BEEN THE CAUSE OF CHILMARK'S FAILURE TO DILIGENTLY SUPERVISE ITS EMPLOYEES AND AGENTS IN THE CONDUCT OF THEIR COMMODITY FUTURES ACTIVITIES. Decision:
ON SEPTEMBER 20, 1988, THE EASTERN COMMITTEE APPROVED AN OFFER OF SETTLEMENT BY CHILMARK AND NADLER AND ISSUED A DECISION PURSUANT THERETO EXPELLING CHILMARK FROM NFA MEMBERSHIP EFFECTIVE 30 DAYS FROM THE DATE OF THE DECISION. THE DECISION ALSO REQUIRES THAT CHILMARK AND NADLER PAY A FINE OF $50,000, FOR WHICH THEY SHALL BE JOINTLY AND SEVERALLY LIABLE, AND CEASE AND DESIST FROM ANY FURTHER VIOLATIONS OF THE CITED NFA REQUIREMENTS. THE DECISION FURTHER PROVIDES THAT NADLER, AND ANY FIRM OF WHICH HE IS A PRIN- CIPAL, SHALL BE SUBJECT TO CERTAIN LIMITATIONS AND RESTRICTIONS, AS ENUMERATED IN THE DECISION, IN THE EVENT THEY APPLY IN THE FUTURE FOR NFA MEMBERSHIP OR ASSOCIATE MEMBERSHIP.
Source: National Futures Association
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