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Shearson Lehman Settles Futures Rules Violation Charges

September 26, 1990

WASHINGTON (AP) _ Wall Street giant Shearson Lehman Brothers Inc. settled administrative charges with federal futures regulators Tuesday and agreed to pay $220,000 in fines for allegedly letting a customer break the rules.

Without admitting or denying wrongdoing, Shearson and two employees agreed to settle an administrative action by the Commodity Futures Trading Commission charging numerous alleged rules violations.

In another CFTC administrative action, three floor brokers at the Commodity Exchange in New York were accused of defrauding customers in silver futures trading.

The defendants have not settled in that case.

In the Shearson case, the CFTC accused the securities firm - which is also a registered futures commission firm - of aiding or allowing a customer to violate exchange limits on how many open contracts in orange juice futures could be traded by one person who is speculating rather than hedging.

A speculator trades commodity futures to profit from anticipating price movements while a hedger tries to minimize risk by taking offsetting positions in both the cash and futures markets.

The CFTC charged that Shearson and Charles M. Barley, an account executive at Shearson’s Winter Park, Fla. office, allowed or assisted a Brazilian trader violate speculative position limits for frozen concentrated orange juice futures on the orange juice section of the New York Cotton Exchange.

The trader, Horst J. Happel, of Sao Paulo, general manager of Citrosuco Paulista S.A., a Brazilian frozen orange juice processor, also was charged in the CFTC administrative action. He has not settled with the agency.

Shearson and the manager of the Winter Park office, Gerald W. Helmich, were accused of improper supervision.

Barley, of Windermere, Fla., agreed to pay a $35,000 fine and a 30-day suspension of his registration. Helmich, of Longwood, Fla., agreed to a two- week ban from supervisory work.

In addition to the $220,000 civil penalty, Shearson agreed to improve its record-keeping procedures.

In the other action, the CFTC accused Craig H. Bell, of Muttontown, N.Y.; Mark B. Dickstein and George J. Fox Jr., both of New York of engaging in 19 non-competitive trading in silver futures between march and October 1987.

They were among the latest individuals named in administrative actions stemming from a federal investigation last year into potential trading abuses at some of the commodity futures exchanges in New York’s World Trade Center.

″It is not the first one and we do not expect it to be the last,″ said Dennis Klejna, chief of the CFTC’s Enforcement Division.

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