In one of the harshest penalties ever meted out by federal futures market regulators, a prominent industry leader and former Chicago Mercantile Exchange chairman, Brian P. Monieson, was fined $500,000 yesterday and banned from the futures business for allowing customers to be cheated.

Administrative law judge George Painter of the Commodity Futures Trading Commission revoked the futures trading registrations of both Monieson and the firm he heads, GNP Commodities Inc. The firm also was fined $500,000.

Painter also revoked the registrations of former GNP brokers Ira Greenspon and Norman Furlett and fined each of them $75,000.

Revoking the registration of a commodity trader or firm is the strongest action the CFTC can take because it effectively bans them from the business for at least 10 years, said CFTC enforcement director Dennis Klejna. The $1 million in fines against Monieson and his firm add up to the biggest monetary penalty ever imposed by a CFTC judge.

Monieson said he would appeal the judge's ruling to the five-member futures commission and, if necessary, the federal courts.

Monieson and his firm are major players in the Chicago futures markets, which in the last decade have transformed themselves from markets for farm crops into one of the world's major financial markets. The Chicago Mercantile Exchange and its rival Chicago Board of Trade have applied the principle of selling commodities for future delivery at prices set today to everything from stocks, bonds and foreign currencies to insurance policies.

The CFTC and Securities and Exchange Commission are in the midst of a bureaucratic turf war over which of the agencies will regulate trading in stock index futures -- contracts to buy and sell packages of stocks at a future date at prices set today.

Supporters of the SEC have charged that the CFTC has been too lax in its regulation of the futures industry, and has allowed trading in stock index futures in Chicago to become so speculative that it has caused dangerous and unnecessary volatility in the price of the stock markets in New York and elsewhere.

The sanctions against Monieson also come as criminal trials are beginning in federal court in Chicago for a number of commodities dealers accused of a variety of trading schemes that the government says were designed to manipulate the commodities markets and defraud customers. A number of floor traders have already entered guilty pleas to those charges.

In the CFTC administration proceeding, Judge Painter said he was imposing the sanctions because Monieson and his firm were "callously indifferent to the wrongs done to their most vulnerable customers" -- small investors dabbling in the futures markets.

In what Painter called "a pernicious, widespread and institutionalized scheme of cheating and defrauding customers," the traders set up a system in which unprofitable trades were charged to the accounts of small retail customers and profitable transactions were credited to accounts controlled by the traders.

Klejna said the illegal trading went on for years and Monieson was personally told by at least three people that the traders were cheating customers, but failed to stop the practices.

Monieson said the decision "was the result of political pressure at a time when the commission's ability to regulate is being questioned by the Congress and the Securities and Exchange Commission."

Klejna said the case against Monieson began long before the debate over whether the CFTC or the SEC should regulate stock index futures.

"The decision was made not by the {CFTC} but by an independent administrative law judge," Klejna said.

Secretary of Agriculture Clayton K. Yeutter testified as a character witness for Monieson, a longtime friend and business associate. Yeutter was chief executive of the Chicago Mercantile Exchange when Monieson was chairman and a board member.

Yeutter's press aide said yesterday after the decision was handed down that Yeutter "supports the judicial process" and emphasized that Yeutter had testified only about Monieson's personal character and not the merits of the complaint.