An administrative law judge found Brian P. Monieson, former head of the Chicago Mercantile Exchange, guilty Friday of failing to adequately supervise two employees accused of defrauding customers. Monieson, chairman of GNP Commodities Inc., was barred from futures trading and ordered to pay a $500,000 fine. GNP Commodities was found guilty of similar charges and ordered to close all customer accounts within 30 days and pay a $500,000 fine. Monieson's attorney, Jerrold E. Salzman, said the penalties against his client and the trading firm are on hold while the ruling is appealed to the full Commodity Futures Trading Commission. The two traders, Ira P. Greenspon and Norman K. Furlett, also were found guilty by Judge George Painter of the CFTC. A lawyer said they were considering an appeal. ``The fraud in this case was committed against the retail customers, a euphemism for relatively small public customers who are virtually defenseless,'' Painter said. ``The shame of this case is that GNP and Monieson were so callously indifferent to the wrongs done to their most vulnerable customers,'' he added. CFTC attorneys said Greenspon and Furlett engaged in ``allocated'' trades that bilked customers of thousands of dollars. The term refers to initiating futures contracts without the required customer account numbers, then keeping profitable trades for themselves while socking customers with the losses. ``The facts set forth in this matter constitute a pernicious, widespread and institutionalized scheme of cheating and defrauding customers,'' Painter said. He banned Greenspon and Furlett, both of Malibu, Calif., from the futures industry and fined them $75,000 each. Monieson's attorneys argued that as chairman of Chicago-based GNP Commodities, he was not involved in daily oversight of his employees and should not be liable for failing to stop any wrongdoing. Painter dismissed those claims, referring to testimony from others who said Monieson was clearly a hands-on manager. ``It appears that Monieson's misplaced allegiance to Furlett and Greenspon overshadowed his greater duty to the customers they were defrauding,'' the judge said. Monieson, of Northbrook, Ill., and GNP Commodities were found guilty of failing to adequately supervise the two traders from September 1984 through May 1986. Monieson was Merc chairman from 1983 to 1985. Futures are contracts to buy or sell commodities, ranging from agricultural products to stocks and bonds, at a specified price on a future date. People trade futures contracts either to lock in commodity prices in advance, thereby reducing their financial risk, or to speculate on price changes. In Chicago, GNP Commodities issued a statement calling Painter's decision ``unprecedented and unwarranted.'' If executives are responsible for their traders' misdeeds, even when the executives did not personally benefit, ``no firm could continue to do business,'' the statement said. Mark S. Boyle, one of two attorneys representing Greenspon and Furlett, said he had not seen the entire 135-page ruling but was considering an appeal. ``We still maintain they did nothing wrong,'' Boyle said. Neither of the men currently works for GNP Commodities, he said. Meanwhile, in Chicago, the Merc on Friday fined GNP Commodities $100,000 and told the firm to continue its voluntary effort to pay $300,000 to customers who may have been harmed. Under a proposed settlement with the Merc, GNP Commodities neither admits nor denies violating exchange rules.
