Two Chicago-based companies and 13 persons have been charged by the Commodity Futures Trading Commission with allegedly defrauding customers in the high-pressure, boilerroom sales of more than $9 million of London commodity options.
In the first lawsuit resulting from its task force investigation of options firms in Miami-Ft. Lauderdale, Fla., the commission is asking a federal court in Florida to bar those named in the suit from further violations, to appoint a receiver for the companies and to require them to surrender allegedly illegal profits.
The complaint, filed Wednesday in U.S. District Court for the Southern District of Florida, names Barclay Commodities Corp. and Murlas Brothers Commodities Inc. and 13 individuals, including the principals of both firms, Nicholas Murlas and Gene and Larry Gabarnick. Both companies operated branch offices in Miami and several states.
The CFTC is to vote a proposed suspension of all commodity options sales in the U.S. at an open meeting next Wednesday.
Pressure from Congress, state law enforcement agencies and consumers for stronger CFTC action has been growing as the boilerroom operations in London options sales proliferated. In the wake of the Lloyd, Carr & Co. scandal late last year, in which the CFTC charged the company with bilking customers out of more than $50 million, the demand for a ban or suspension on options sales peaked.
The complaint filed Wednesday alleges that Barclay solicited $7.8 million from customers since late 1976, while the Murlas company allegedly took in $1.3 million.
A CFTC official said the enforcement division is preparing several other cases as a result of the Florida investigation. "This is just the tip of the iceberg," one CFTC aide said.