The U.S. Commodity Futures Trading Commission (CFTC) has settled charges against Robert Moore of Connecticut, former executive managing director for the Bank of Montreal’s (BMO) Commodity Derivatives Group, relating to the mismarking and misvaluing of BMO’s natural gas options book by a trader he supervised, the CFTC said Monday.

The order, entered by Judge George B. Daniels of the U.S. District Court for the Southern District of New York, requires Moore to pay a $150,000 civil penalty within 10 days. It also permanently prohibits him from engaging in any conduct in violation of the Commodity Exchange Act and/or CFTC regulations concerning any commodity options transaction.

The order stems from a CFTC complaint filed on Nov. 18, 2008 that charged defendant David P. Lee with unlawfully mismarking his natural gas options positions between at least May 2003 and May 2007 and with misvaluing other natural gas options positions from October 2006 until May 2007.

Further, the complaint charged that Lee and various brokers deceived BMO by fabricating purportedly independent broker quotes delivered to BMO’s back office for price and skew verification. The complaint alleged that such conduct violates the anti-fraud and false reporting provisions of the Commodity Exchange Act and CFTC regulations. Moore was Lee’s direct supervisor at BMO. Moore was charged with “controlling person liability” for Lee’s violations.

Lee settled the action against him in November (see Daily GPI, Nov. 9, 2009). The CFTC’s litigation continues against the remaining defendants in the action.

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