Page last updated at 09:01 GMT, Wednesday, 9 April 2008 10:01 UK

Former Nymex boss in trade fraud

The floor of the New York Mercantile Exchange
The fraud involved commodity deals

A former director of the New York Mercantile Exchange (Nymex) faces jail after admitting fraud linked to commodities trading.

Steven Karvellas pleaded guilty to the offences in a plea bargain that will see him jailed for five months.

Three other Nymex commodities traders also admitted charges while a further three people have been arrested.

Karvellas, who agreed to pay fines and penalties of $850,000 (425,000), made no comment outside court.

Nymex is the world's leading trading exchange for oil and precious metals.


He had been a floor trader at the firm since 1990 but was also a member of the Nymex board between 1996 and 2006, and served on the board's executive committee between 1998 and 2002.

The fraud, which happened between 2002 and 2003, involved Karvellas delaying allocating customer orders to buy or sell natural gas contracts until he could see whether the market was rising or falling.

You have got the fox in the chicken house
Robert Morganthau, Manhattan District Attorney

Court documents showed that when the market price moved to make an order profitable immediately, he put the contracts in his own name, rather than the customer's.

Nymex chief executive James Newsome welcomed the probe.

He said the court 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".

Prosecutors said that one of Karvellas' main responsibilities at the firm had been to look out for cases of fraud.

"You have got the fox in the chicken house," Manhattan District Attorney Robert Morganthau said of Karvellas' actions.

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