MANHATTAN (CN) – Elliot Smith, a founding member of the Chicago Board Options Exchange and the AMEX Commodities Exchange, pleaded guilty Tuesday to obstructing justice when the SEC investigated him for inside trading, federal prosecutors said. Smith admitted he cooked up phony documents for the SEC that tried to show he had traded on a pharmaceutical company’s stock based on his own research, not on inside information.
Smith ran the game in response to an SEC subpoena in December 2003, while he was managing director of Broadband Capital Management in New York, according to the 1-count information. He testified falsely to the SEC about the bogus memos in July 2004.
In February 2006, when the SEC informed Smith that it was expanding its investigation to include his trades in two other companies’ stocks, he cooked up another phony memo: “as Smith well knew, this memo was also fake,” the U.S. Attorney’s Office said. He also told his administrative assistant to lie about the phony memo, prosecutors said.
Smith, 76, of New York, N.Y., faces up to 5 years in prison and a fine of $250,000 at his March 17, 2009 sentencing.