CORPORATE CRIME REPORTER
Former
Head of Citibank Commodities Desk Gets 15 Months
21 Corporate Crime Reporter 13, March 19, 2007
David Becker, the former head of the commodities trading desk at Citibank NA,
was sentenced to 15 months in prison.
In September 2006, Becker pled guilty to scheming to inflate the trading profits of the Citibank commodities desk by as much as $20 million during 2003 in order to enhance his apparent job performance and his eligibility for bonuses from Citibank.
Federal officials alleged that Becker, the head of Citibank’s worldwide commodities trading activity, and Charles Craig Gile, the head of American commodities trading and sales, overstated the financial performance and understated the market risk of Citibank’s commodities desk during 2003.
Gile pled guilty to similar charges on October 19, 2006 and is scheduled to be sentenced on April 20, 2007.
Becker and Gile inputted false data into a computer model used to estimate the value of positions held by the commodities desk.
They input correlations into that model that were inconsistent with market rates and inconsistent with correlations input for similar contracts held by the commodities desk, but which artificially inflated the profit reported by the desk by millions of dollars.
In January 2004, after the end of Citibank’s financial year and after questions had been raised about the accuracy of those correlations, Becker and Gile changed certain of the correlations back to market rates.
Becker and Gile also input fictitious options trades into the computer model in order to reduce reported market risk and increase reported profits.
Federal officials alleged that Becker and Gile also directed a broker at an independent commodities brokerage firm to supply false market quotes to the Citibank financial control department in order to undermine its monitoring of the Citibank commodities desk.
In addition to 15 months in prison, Becker was sentenced to 2 years’ supervised release, a $25,000 fine, and a $100 special assessment. He was also ordered to pay $200,000 in restitution.
Becker, 40, lives in Great Neck, New York.
Gile, 42, lives in Longwood, Florida.
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