The following excerpt is from the CFTC website:
“Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) announced today that the U.S. District Court for the Northern District of Illinois entered a final default judgment on May 5, 2011, against defendant Carmine Garofalo, an Italian national who purports to reside in Tunisia, requiring him pay $614,925 in restitution and a $1,844,775 civil monetary penalty. The CFTC charged Garofalo with fraud and noncompetitive trading in connection with transactions executed on the Chicago Mercantile Exchange (CME) in March 2010 (see CFTC Press Release 5813-10, April 22, 2010).
On August 16, 2011, the court entered a distribution order requiring that funds previously frozen in a personal account held by Garofalo at Interactive Brokers LLC be used to pay restitution and a portion of Garofalo’s civil monetary penalty. The court’s order requires that full restitution of $614,925 be paid to the victim of Garofalo’s fraudulent transactions.
The court’s final judgment order finds that Garofalo simultaneously entered trades for his account at Interactive Brokers LLC and an account held at an Italian bank on behalf of a Luxembourg-based client. Garofalo intentionally executed parallel orders to buy and sell E-mini S&P 500 options and Euro/U.S. Dollar European Style Premium options during after-hours trading on the March 5, 2010 trading day -- a period of low volume options trading -- with the purpose of having the opposite orders find and match each other on the CME’s Globex trading platform, the order finds. According to the order, during a 5-hour period on the March 5, 2010 trading day, Garofalo fraudulently executed 168 trades in the account of the client and was successful in matching 119 of the orders with orders placed in his personal account, resulting in a money pass.
The CFTC thanks the CME Group, the Italian Commissione Nazionale per le Società e la Borsa, and the U.S. Consulate in Milan, Italy, for their assistance.”
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