The Federal Reserve Board on Tuesday announced the issuance of a Consent Order of Prohibition against David Lee, former managing director of the Commodities Trading Group and institution-affiliated party of the Chicago, Illinois, branch of the Bank of Montreal ("BMO").
Mr. Lee, without admitting to any allegations, consented to the issuance of the Order based on his alleged participation in unsafe and unsound banking practices, breaches of fiduciary duty and violations of law, in connection with his natural gas options trading activity at BMO. The Order asserts that Mr. Lee allegedly compromised the independent price verification process BMO relied on to ascertain the true value of his trading book, and also executed and then misvalued exchange of options for options trades in order to conceal the true value of his book, which led to after-tax losses to the bank of at least C$327,000,000. In addition, the United States Attorney for the Southern District of New York and the District Attorney for New York County announced today that Mr. Lee has agreed to plead guilty to criminal charges relating to this matter. The Commodity Futures Trading Commission and Securities and Exchange Commission also separately announced the filing of civil lawsuits in related matters.
A copy of the Order is attached.
