CBOT traders accused of fraud

The U.S. Commodity Futures Trading Commission accused two Chicago Board of Trade floor traders of fraud for allegedly trading Treasury futures contracts with rigged prices in 2004.

Edward Sarvey and David Sklena, who trade five-year Treasury futures with Chicago-based CME Group Inc., took advantage of volatile markets in April 2004 to defraud customers, the regulator said in an e-mailed statement Thursday.

"Sarvey cheated and defrauded his customers by as much as $2.1 million" because he sold contracts for less than they were worth, the regulator's complaint said. The regulator is seeking injunctions against the traders, the return of profits and civil monetary penalties for each alleged violation of the Commodity Exchange Act.

The CFTC complaint says Sarvey had customer orders to sell 2,474 five-year Treasury futures on a day when new U.S. job growth was reported. Due to higher job creation than markets were expecting, volatile trading following the report caused Treasury futures prices to drop, the complaint said.

The price recovered before Sarvey could sell his customer contracts. He then sold them to Sklena at a non-competitive price that was lower than the market price at the time, according to the CFTC.

Attempts to reach Sarvey, Sklena, Lawrence-Bonfitto Trading Co. and Bonfitto were unsuccessful.

The complaint also alleges Sarvey bought 485 Treasury futures contracts from Sklena at a lower price than market rate and then immediately sold them, making a profit of more than $357,000.

The CFTC also named Lawrence-Bonfitto Trading Co. and Joseph Bonfitto as defendants. Bonfitto and his company cleared the suspect futures trades for Sklena, making a $650,000 profit, the CFTC alleged.