U.S. regulators charge ex-Bank of Montreal trader

By Grant McCool

NEW YORK (Reuters) - The Bank of Montreal's former lead natural gas trader has pleaded guilty to inflating the value of his portfolio and conspiring with others to deceive the bank, federal prosecutors in New York said on Tuesday.

The former trader, David Lee, also admitted destroying evidence after an inquiry by the U.S. Commodity Futures Trading Commission, Michael Garcia, the U.S. Attorney for the Southern District of New York, said in a statement.

Separately, the U.S. Securities and Exchange Commission and the CFTC filed civil charges against Lee and several other traders he is accused of conspiring with between 2003 and 2007 to fraudulently overvalue a commodity derivatives trading portfolio at Bank of Montreal.

Garcia's office also said a six-count indictment had been unsealed charging Kevin Cassidy, the former chief executive officer of the Optionable Inc commodities brokerage firm, with involvement in Lee's scheme to deceive the Bank of Montreal.

In addition, Manhattan District Attorney Robert Morgenthau said Lee had pleaded guilty to breaking New York State banking laws by falsifying his bank's trading records.

Lee's actions led to Bank of Montreal in May 2007 reducing its net income for the 2007 first quarter by C$237 million, according to the SEC suit.

Bank of Montreal spokesman Ralph Marranca said the bank was pleased with the announcements by the authorities.

"We have cooperated fully with the authorities and we will continue to do so," Marranca said.