Anthony S. Ramirez of south suburban Homewood is a trading firm’s worst nightmare: a former employee who knows just enough to be dangerous.
On Nov. 15, 1993, the twenty-something investment adviser phoned an urgent order into the Prudential Securities booth where he had once worked on the floor of the Chicago Board of Trade grain room.
Ramirez reached a clerk who dutifully wrote down the bogus name and broker number. Drawing on his knowledge of Prudential practices, Ramirez made his order sound authoritative, and the firm swung into action.
Within minutes, Prudential had sold 14 million bushels of soybeans and 5 million bushels of corn–almost 4,000 contracts.
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By the time the firm woke up to the hoax and closed out the order, its losses were $561,000.
Ramirez lost money, too, according to his lawyer, James McGurk of McConnell & Mendelson. A former runner and desk clerk, Ramirez couldn’t move fast enough to pull off his end of the scheme by cashing out a $1,500 options position in his personal account. He had hoped the options trade would become profitable when his phony order briefly moved the markets.
Details of the scheme emerged last week as Ramirez pleaded guilty to mail fraud before U.S. District Judge Joan Gottschall. He faces sentencing on Feb. 19, McGurk said.
Besides his Board of Trade scheme, Ramirez admitted to raising $600,000 from investors to trade commodities and stocks, then spending two-thirds of it on trips, luxury cars and other personal expenses.
Among Ramirez’s victims: A member of his church who was confined to a wheelchair, a widow who invested the proceeds of her late husband’s life insurance policy and his own grandmother.
Ticking away: The Board of Trade’s battle over the size of minimal trading increments in its U.S. Treasury contracts is boiling down to two emotive arguments.
Those opposing the exchange plan to reduce the tick size for certain types of trading say it’s the camel’s nose under the tent. If ticks start shrinking for specialized financial trades, where will it stop? Before too long, they warn, floor traders will be unable to make a living.
Those in favor of cutting the tick size say it’s the only way to preserve the business from stiffer competition. If wide spreads start driving away customer order flow, where will it stop? Before too long, they warn, floor traders will be unable to make a living.
A membership vote on the proposal is slated for Oct. 8.
Up the down staircase: For a while, it looked like commodities trading adviser Richard Dennis had lost his touch. After posting gains exceeding 100 percent in 1995 and ’96, he was down nearly 30 percent through August of this year, after seven consecutive losing months. Could a repeat of his two previous crash-and-burn episodes be in the offing?
Not yet, anyway. Dennis came roaring back in September. His $95 million Dennis Trading Group fund shot up more than 35 percent, his best month ever under the all-computerized system he began using several years ago.
That comeback brings his gain for the year to 10 percent. Most of the winning trades were in European financials, a Dennis spokesman said, though a single trade in the Standard & Poor’s 500 accounted for a substantial chunk of the profits.
Dow Olympics? The Chicago Board Options Exchange has lined up a former Bear and a former Bull for the start of options trading on the Dow Jones industrial average. Walter Payton and John Paxson will ring the bell Monday. The Board of Trade, meantime, has been unable to get a commitment from its choice, Michael Jordan. Stay tuned for an alternative, a spokesman said.
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