The CFTC announced that a final default judgement has been entered against Carmine Gerofalo, an Italian national thought to reside in Tunisia, for illegal trades made on the CME Globex platform. On May 5th, an order was handed down by a federal judge in Illinois requiring him to pay $614,925 in restitution and $1,844,775 in civil monetary penalty. On August 16th, a distribution order took assets frozen in his Interactive Brokers account to cover restitution and part of the civil monetary penalty owed.
Gerofalo was found to have engaged in fraud and non-competitive trading on the Chicago Mercantile Exchange (“CME”) in March of 2010. On March 5th, the defendant simultaneously entered trades from his account at Interactive Brokers LLC and an account at an Italian bank for a Luxembourg-based client, which he accessed without authorization. These intentionally executed parallel orders on E-mini S&P 500 options and Euro/USD European Style Premium options were made during after-hour trading.
Gerofalo intended these orders to find and match each other during this period of low trading volume on the CME’s Globex platform. During one five hour period, the defendant executed 168 trades in his client’s account, 119 of which were successfully match to orders in his personal account. This caused money to be passed into his account, and the resulting balance of the trades was in his favor.