NEW YORK -- The New York Mercantile Exchange Thursday requested the resignation of its chairman, Z. Lou Guttman, in light of illegal trades charges brought against him by the Commodity Futures Trading Commission.
The exchange said Guttman refused to resign on the grounds that the issue should be decided by the membership rather than the board of the Merc, the world's largest oil and gasoline futures exchange.
The Washington-based commodity commission Wednesday filed a complaint against Guttman, two other brokers and Gerald Inc., a Chicago-based commodities firm, charging them with making illegal trades in 1989.
The allegations against Guttman, who has been the chairman of the Merc since August 1988, were denied in a statement put out by his attorney, Barry Bohrer.
'We remain confident that the charges against Mr. Guttman are unfounded and unprecedented,' Bohrer said. 'The commission's timing in bringing these charges is both unseemly and unfair, particularly given the impending elections at the New York Mercantile Exchange.'
The CFTC also charged Gary Glass, a New York broker, and Jay Magid, a registered floor broker, in its complaint.
The commission alleges that Guttman and his agent, Magid, engaged in non-competitive trading of options on sugar futures contracts during 1989.
Gerald, which maintained accounts in common for Guttman and Magid, also was charged with reporting violations and other infractions.
The Commodity Futures Trading Commission alleges that from March through October 1989 the accounts owned by Guttman and Magid as well as Magid's personal accounts 'had equity debits ranging from several hundred thousand dollars to several million dollars.'
The commision maintains that to reduce or eliminate those debits, Magid, acting for Guttman and himself, 'entered into a series of non- competitive transactions on 11 days by selling options on sugar futures contracts to Glass on the last trading day of one month and buying them back from him on the first trading day of the next month.'
As a result of the alleged illegal trades, the commission charges Magid raised about $19.038 million in equity in six different trades during 1989 for the Magid-Guttman accounts.
During the transactions, the commission contends Magid was acting for Guttman, making him liable because Guttman was a principal of his Magid, his agent.
Gerald was charged by the commission with financial requirements and reporting violations on the days during Magid's alleged illegal trades.
A hearing has been ordered by the commission to look into the allegations and determine if they are true and what sanctions, if any, should be imposed, the CFTC said.