Charges in probe of NY Mercantile Exchange

April 8, 2008 9:49:27 AM PDT
Authorities say seven people are charged in a probe of illegal trading at the New York Mercantile Exchange - including a former board member who has pleaded guilty in exchange for five months in jail. Steven J. Karvellas pleaded guilty to violating New York's general business law and tampering with physical evidence. Besides the jail time, he will receive five years of probation and must pay $850,000 in fines and legal costs.

Three other people already have pleaded guilty for participating in fraudulent commodities trading; another three have been arrested and their cases are pending.

Manhattan District Attorney Robert Morgenthau and the head of the Commodity Futures Trading Commission planned a news conference to discuss details of the case.

Court papers say Karvellas was on the exchange's board of directors from 1996 to 2000. He also served as chairman of the exchange's Adjudication and Compliance Review Committee from 2000 to 2003.

The illegal activity occurred between September 2002 and May 2003.

From 1990 until this year, Karvellas was a floor broker who traded at the exchange. Authorities said he owned two Manhattan companies: Steven J. Karvellas and Co., a natural gas trading company, and Commercial Brokerage Corp.