38 Cath. U. L. Rev. 69 (1988-1989)
Front-Running - Insider Trading under the Commodity Exchange Act

handle is hein.journals/cathu38 and id is 81 raw text is: FRONT-RUNNING-INSIDER TRADING
UNDER THE COMMODITY
EXCHANGE ACT
Jerry W. Markham*
On Black Monday, October 19, 1987, perhaps the worst day in the
history of U.S. equity markets, the Dow Jones Industrial Average fell by
508 points, representing a loss of approximately $1 trillion' in the value of
all outstanding United States stocks. In the wake of the crash, numerous
studies were conducted and reports published in which a host of regulatory
issues were considered,2 including a disturbing phenomenon called front-
running.3
* B.S., 1969, Western Kentucky University; J.D., 1971, University of Kentucky College
of Law; LL.M., 1974, Georgetown University. Mr. Markham is a partner in the Washington,
D.C. office of Rogers & Wells. He was previously Chief Counsel of the Enforcement Division
of the Commodity Futures Trading Commission; Secretary and Counsel for the Chicago
Board Options Exchange; and an attorney at the Securities and Exchange Commission. He is
also an Adjunct Professor at Georgetown University Law Center, where he teaches commodi-
ties regulation.
1. REPORT OF THE PRESIDENTIAL TASK FORCE ON MARKET MECHANISMS 1, 36 (Jan.
1988) [hereinafter BRADY REPORT].
2. Id.; N. KATZENBACH, AN OVERVIEW OF PROGRAM TRADING AND ITS IMPACT ON
CURRENT MARKET PRACTICES, A STUDY COMMISSIONED BY THE NEW YORK STOCK Ex-
CHANGE (NYSE) (Dec. 21, 1987) [hereinafter NYSE REPORT]; M. MILLER, J. HAWKE, B.
MALKIEL & M. SCHOLES, PRELIMINARY REPORT OF THE COMMIrrTEE OF INQUIRY AP-
POINTED BY THE CHICAGO MERCANTILE EXCHANGE (CME) TO EXAMINE EVENTS SUR-
ROUNDING OCTOBER 19, 1987 (Dec. 22, 1987) [hereinafter CME REPORT]; DIVISION OF
TRADING AND MARKETS, COMMODITY FUTURES TRADING COMMISSION (CFTC), ANALYSIS
OF TRADING IN THE CHICAGO BOARD OF TRADE'S MAJOR MARKET INDEX FUTURES CON-
TRACT ON OCTOBER 20, 1987 (Jan. 4, 1988); Division of Economic Analysis and Division of
Trading and Markets, CFTC, Interim Report on Stock Index Futures and Cash Market Activity
During October 1987 to the U.S. Commodity Futures Trading Commission, 2 Comm. Fut. L.
Rep. (CCH)   23,969 (Nov. 9, 1987); DIVISION OF TRADING AND MARKETS, CFTC, FOL-
LOW-UP REPORT ON FINANCIAL OVERSIGHT OF STOCK INDEX FUTURES MARKETS DURING
OCTOBER 1987 (Jan. 6, 1988); GENERAL ACCOUNTING OFFICE, FINANCIAL MARKETS: PRE-
LIMINARY OBSERVATIONS ON THE OCTOBER 1987 CRASH (Jan. 1988) [hereinafter GAO RE-
PORT]; REPORT OF THE INTERNATIONAL STOCK EXCHANGE, QUALITY OF MARKETS
QUARTERLY (Winter 1987-1988); REPORT OF THE FINANCIAL MARKETS AND INSTITUTIONS
DIVISION OF THE BANK OF ENGLAND (1988).
3. SECURITIES EXCHANGE COMMISSION (SEC) STAFF REPORT, THE OCTOBER 1987
MARKET BREAK (Feb. 11, 1988) [hereinafter SEC REPORT]; DIVISION OF ECONOMIC ANALY-
SIS AND DIVISION OF TRADING AND MARKETS, CFTC, FINAL REPORT ON STOCK INDEX

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