The Manhattan district attorney’s office and the Commodity Futures Trading Commission announced charges of illegal trading on the floor of the New York Mercantile Exchange.

Robert Morgenthau, Manhattan DA, and Gregory Mocek, the director of enforcement of the CFTC, announced that a former director of the NYMEX pled guilty. Also, three others involved in commodities trading pled guilty as a result of their participation in the illegal conduct, and three others were arrested previously and their cases are pending.

The former board member admitted that, while working as a floor broker at NYMEX, he intentionally engaged in fraudulent trading in the natural gas market. According to the DA’s office, he admitted that he delayed the execution of customer orders, and if the market moved to make the customer order immediately profitable, he would allocate the contracts to himself rather to the customer. He also admitted to tampering with evidence.

In exchange for the plea, he was promised a sentence of five months in jail to be followed by five years probation. He will also disgorge $850,000 in profits and fines.

In addition to this plea, three other individuals involved in fraudulent commodities trading at NYMEX have pleaded guilty to various charges. Also, two other former floor clerks were arrested previously, also on charges of trading ahead of customer orders, and a former NYMEX employee, was arrested for commercial bribe receiving. These allegations have not been proven.

The CFTC also announced the issuance of two orders filing and simultaneously settling charges against two of the individuals charged by the DA for fraudulently allocating trades to their personal accounts and depriving customers of the opportunity to profit. The orders require them to pay $437,500, in total, in penalties and permanently prohibit them from trading in the commodities markets.

Morgenthau said that the investigation leading to the guilty pleas and arrests resulted from a referral from the CFTC. After the referral, a joint investigation was commenced; and that investigation is continuing.

CFTC acting chairman Walter Lukken said, “As today’s actions show, civil and criminal agencies achieve powerful results when they work together to stamp out fraud. The CFTC will continue to coordinate our civil prosecutions with local, state, and federal criminal authorities to protect the investing public from wrongful activity in our markets.”

In response to the charges, NYMEX president and CEO, James Newsome issued a statement, saying, “NYMEX is very grateful to District Attorney Robert Morganthau and the CFTC for their diligent work in investigating these matters. Today’s action should serve as an unmistakable notice to our market participants that NYMEX will not hesitate to work with law enforcement authorities, or take whatever steps are otherwise necessary, to protect the integrity of our markets.”