Posted by Guest
(Post 1272363)
you sure about that?
Chicago Mercantile Exchange records indicated that $40,000 of her profits came from larger trades initiated by James Blair. According to exchange records, "Red" Bone, the commodities broker that facilitated the trades on behalf of Refco, reportedly because Blair was a good client, allowed Rodham to maintain her positions even though she did not have enough money in her account to cover her activity. For example, she was allowed to order 10 cattle futures contracts, normally a $12,000 investment, in her first commodity trade in 1978 although she had only $1,000 in her account at the time.[14] Bone denied any wrongdoing in conjunction with Rodham's trading and said he did not recall ever dealing with Rodham personally.[9][3]
As it happened, during the period of Rodham's trading, Refco was under investigation by the Mercantile Exchange for systematic violations of its margin trading rules and reporting requirements regarding cattle trading.[9][3] In December 1979, the exchange issued a three-year suspension to Bone and a $250,000 fine of Refco (at the time, the largest such penalty imposed by the exchange).[9][3]
The trading practices in Refco's office in Springdale, Arkansas, of which Bone was the manager,[3] came under investigation following the October 1979 collapse of cattle prices, which caused traders with that office to lose nearly $20 million.[9] A number of the traders, including Blair, sued Refco and its chair, Thomas Dittmer, as well as Bone, on grounds of having manipulated prices and thus precipitating the collapse.[9][19] Blair and Refco reached an out-of-court settlement.[9] In a case that went to trial, an Arkansas jury found in favor of some of the traders and against Refco and Dittmer, but that verdict was later overturned by a federal appellate court.[9] Court documents detailed some of the alleged trading practices at Refco, including block trading, end-of-day allocation, backdating of trades, and waived margin calls.[9] Two brokers at Springdale, Bill McCurdy and Steven Johns, testifying about another trader's case, said they participated in a cover-up of block trading on a day in June 1979 that happens to coincide with the opening of what would become Rodham's single most profitable trade.
Corruption in early training.
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