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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
COMPLAINT PESO EXCHANGE TRADING COMPLAINT ALLEGES FICTITIOUS RECORDS SECURITIES SOUTHERN DISTRICT MEXICAN PESO CURRENCY CONVERTIBILITY TRADES EXCHANGE COMMISSION UNITED STATES STATES DISTRICT COURT YORK TRANSACTIONS ACCORDING VIOLATING EXCHANGE ACT VICTOR FILING FOREIGN DEVALUATION CHARGES THEREUNDER CONVERTIBILITY GUARANTEE FUND TRANSFERS PROFITS |
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 14851 / March 21, 1996
SECURITIES AND EXCHANGE COMMISSION v. VICTOR R. GOMEZ, United
States District Court for the Southern District of New York, 96
Civ. No. 96-2056 (LMM)
The Securities and Exchange Commission ("Commission")
announced the filing today of a Complaint in the United States
District Court for the Southern District of New York against
Victor R. Gomez, a former vice president in Chemical Banking
Corporation's ("Chemical") foreign exchange trading group. The
Complaint alleges that in 1994 Gomez engaged in a series of
unauthorized, multi-million dollar foreign currency transactions
involving the Mexican peso, and concealed his unauthorized
activity by creating fictitious records for certain transactions
and by failing to record others. According to the Complaint,
Gomez' unauthorized currency trading placed Chemical in a multi-
million dollar, unhedged position in the Mexican peso, which
resulted in a loss of approximately $69 million for Chemical when
the value of the peso dramatically fell in December 1994 after
the Mexican government announced it would no longer support the
currency. The Complaint alleges that because of Gomez'
fictitious records and false statements to supervisors, Chemical
officials initially were unaware of the open peso position. As a
result, Chemical falsely reported to securities analysts that the
bank had "minimal" exposure from the peso devaluation even as
Chemical in fact faced material, and mounting losses from Gomez'
unauthorized trading activity. The Complaint charges Gomez with
violating Sections 10(b) and 13(b)(5) of the Securities Exchange
Act of 1934 ("Exchange Act"), and Rules 10b-5 and 13b2-1
thereunder.
Specifically, the Complaint alleges that Gomez, to whom
Chemical assigned primary responsibility for its Mexican peso
transactions in 1994, entered into nine unauthorized
convertibility guarantee contracts, made two unauthorized fund
transfers and executed seventeen unauthorized and unhedged
currency trades. Each convertibility guarantee obligated
Chemical to exchange from $13 million to $175 million for pesos
at the market rate on specified future dates. The Complaint
alleges that Gomez did not disclose the convertibility
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