U.S. watchdog charges CME over client data breaches

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The top U.S. derivatives regulator charged the CME Group Inc and two former employees with disclosing non-public information about customer trades, saying it would seek fines and bans from the industry.

The Commodity Futures Trading Commission (CFTC) said on Thursday that details of recently executed trades, the identity of the parties and the prices paid had been improperly disclosed over a period of 2-1/2 years.

The complaint was against the CME's energy exchange, the New York Mercantile Exchange (NYMEX).

"The CME NYMEX and the two former employees violated the Commodity Exchange Act and CFTC Regulations, which specifically prohibit the disclosures of this type of customer information," the CFTC said in a press release.

One former employee, William Byrnes, disclosed non-public information about trading and customers to a commodity broker on at least 60 occasions, the CFTC said. The other ex-employee was named as Christopher Curtin.

"The CFTC court action announced today is disappointing because it relates to incidents that CME Group has already addressed and handled appropriately," the CME said in a press release in reaction to the complaint.

It said that it had immediately terminated the employees when it learned of the breaches of procedure. The leaks were not used - and could not have been used - for insider trading, and no customer suffered a financial loss.

The CME, the world's largest futures exchange, is also a self-regulatory organization that oversees parts of the futures markets on behalf of the CFTC.

Historically, U.S. market regulators have not aggressively pursued enforcement actions against exchanges. But in recent years, they have begun to crack down harder.

"Those who run exchanges and profit from trading need to be responsible custodians of information and their employees' actions related to sensitive data," CFTC Commissioner Bart Chilton said in an emailed statement.

The CME was also the primary regulator of MF Global, the futures brokerage which collapsed in 2011, leaving a hole of more than $1 billion in client assets. (Reporting by Douwe Miedema; Editing by Gerald E. McCormick and Richard Chang)

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