Russian Scams OEC (Open E Cry) for $8 Million

[macdfx 10]

Risk dept at futures broker Open E Cry (OEC) asleep as Russian scammer fleeces them for $8 million

 

http://www.courthousenews.com/2010/06/09/27928.htm

 

Software Opened $8M Loophole, Firm Says

By DAN MCCUE

 

(CN) - A Russian man in the United States on a work visa exploited a software glitch to swipe nearly $8 million by trading Russian ruble futures, a commodities firm claims Cook County Court. Plaintiff Open E Cry claims that Marat Yunusov's trades on June 4 - last Friday - accounted for more than 50 percent of all the foreign exchange trades on the Chicago Mercantile Exchange that day.

 

Open E Cry, a broker registered on the Merc as OEC, claims that in early June, Yunusov discovered the glitch in the third-party online accounting software it used.

 

Because of the software error, losses in Russian ruble futures, a lightly traded commodity, were reflected at 1/10th their actual value, Open E Cry says.

 

Upon discovering the software error, Yunusov and an unnamed accomplice made more than 19,000 trades in a single day - June 4 - booking the losses on Yunusov's account, while hiding his gains in his confederate's account, according to the complaint.

 

The plan would allow Yunusov to "walk away" from the large debit in his trading account, while recouping his losses through equivalent profits in the other account, the complaint states.

 

By the end of the trading day, Yunusov's account reflected liquidated losses of more than $8 million, while the other account reflected a gain of $7.5 million, OEC says. But OEC says that Yunusov's greed raised a red flag.

 

His trades on June 4 accounted for more than 50 percent of all the foreign exchange trades done on the Merc that day, and nearly 98 percent of the trading in Russian Ruble futures, according to a footnote in the complaint.

 

OEC says it has demanded that Yunusov, of Kazan, Russia, cure his account's negative balance, but he has refused.

 

OEC demands repayment of $8 million, punitive damages, prejudgment interest of $2,600, attorneys' fees and costs on claims of fraud, fraudulent accounting, unjust enrichment, and injunctive relief.

 

It is represented by Jeffry M. Henderson and Robert Christie with Henderson & Lyman in Chicago.

 

Here's a copy of the CFTC complaint...and press release:

 

http://cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfyunusovcomplaint06112010.pdf

 

http://www.cftc.gov/PressRoom/PressReleases/pr5836-10.html

 

CFTC Charges Marat Yunusov with Engaging in a Series of Unlawful Commodity Futures Transactions on Globex

Court order freezes certain of Yunusov’s assets and prohibits the destruction of documents.

 

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) filed a complaint on June 11, 2010, in the U.S. District Court for the Northern District of Illinois charging Marat Yunusov with engaging in fictitious transactions and trading noncompetitively on the Chicago Mercantile Exchange (CME) Globex electronic trading platform. Yunusov, who has never been registered with the CFTC, has held himself out to be a Russian national and also uses the name Ayrat Yunusov.

 

On June 14, 2010, the emergency judge, the Honorable Joan B. Gottschall, issued a restraining order freezing certain of Yunusov’s assets and prohibiting the destruction of documents. A hearing on the CFTC’s motion for a preliminary injunction is scheduled on June 23 at 1:30 pm before the assigned presiding judge, the Honorable Elaine E. Bucklo.

 

Specifically, the CFTC complaint alleges that, during the evening of June 3 and the morning hours of June 4, 2010, Yunusov engaged in a series of unlawful commodity futures transactions on the CME’s Globex electronic trading platform, buying and selling thousands of futures contracts, the vast majority of which were in back-month, illiquid markets.

 

Using separate accounts carried at two different registered futures commission merchants, Open E Cry LLC and Velocity Futures, LLC, Yunusov’s trading resulted in more than $7.8 million in losses to his Open E Cry account and an approximate $7.2 million profit to his Velocity account, after commissions and fees. Open E Cry has had to cover the losses from its own proprietary funds, according to the complaint.

 

The CFTC thanks the CME Group, Inc., the parent of the CME, Open E Cry LLC and Velocity Futures, LLC for their assistance in this matter.

 

In its continuing litigation, the CFTC seeks restitution, civil monetary penalties, trading and registration bans and a permanent injunction against further violations of the federal commodities laws.

 

The following CFTC Division of Enforcement staff members are responsible for this matter: William Janulis, Mary Kaminski, Rosemary Hollinger, Scott Williamson and Richard Wagner.

 

 

 

Any comments, especially from long-time users like Brownsfan?

enfyunusovcomplaint06112010.pdf

Edited June 21, 2010 by macdfx
added CFTC press release; updated quotes

[TheDude 10]

Wow! Doing that kind of volume, I wonder if he's entitled to volume rebates from the Merc? :haha:

 

At least it shows OEC can handle surges in demand! (I dont use OEC)

[brownsfan019 17]

Any comments, especially from long-time users like Brownsfan?

 

Yep, stuff happens. There's always someone trying to work a loophole.

 

Unfortunately it happened.

 

Everything still perfectly fine on my end w/ OEC.