Chicago City Wire

William C. Carlson, founder of Belvedere Trading LLC, has raised serious allegations against CBOE Global Markets Inc., citing issues of fraud, wire transfers, and oversight breakdowns involving a member firm. This statement was made in a formal memorandum.

"CBOE Arbitration ceased to function after CBOE became a public company in 2010, raising conflict-of-interest concerns between dispute resolution and corporate interests," said Carlson. "Unauthorized 7-figure wire transfers were made by personnel without the knowledge, consent, or authority of the Managing Member. A 2010 forensic report by CPA Robert Cooper “Robert Cooper CPA Forensic Report” documents extensive criminal conduct, including theft and wire fraud. Demands for up to $9 million from a founder's capital account were made under duress and threat of legal “sabotage."

CBOE Global Markets Inc. has been under regulatory scrutiny for its oversight of member firms. In 2013, the U.S. Securities and Exchange Commission (SEC) charged the Chicago Board Options Exchange (CBOE) and an affiliate with systemic breakdowns in their regulatory and compliance functions, including failures to enforce rules preventing abusive short selling. CBOE agreed to pay a $6 million penalty and implement significant remedial measures. More recently, in 2022, the U.S. Court of Appeals for the Seventh Circuit affirmed the dismissal of a lawsuit alleging CBOE failed to curb manipulation of prices related to CBOE Volatility Index contracts, citing the plaintiffs' failure to demonstrate bad faith.

In October 2019, according to reports from the U.S. Commodity Futures Trading Commission (CFTC), Belvedere Trading LLC was ordered to pay a $1.1 million civil monetary penalty for engaging in spoofing activities in the E-mini S&P 500 futures market. The CFTC found that two traders from Belvedere placed hundreds of orders they intended to cancel before execution, creating a false impression of market demand.

Carlson filed a formal complaint with the Illinois Attorney Registration and Disciplinary Commission (ARDC) against Mark Francis Duffy, a former director at CBOE Global Markets, in May. Carlson alleges that Duffy failed to act on substantial evidence of financial irregularities and internal misconduct at Belvedere Trading.

Carlson founded Belvedere Trading LLC in 2002 as a proprietary trading firm through Chicago Board Options Exchange channels, focusing on equity index options trading. He sold his interest in Belvedere to his partners in 2008 but has remained involved in legal disputes related to the firm's operations.

Belvedere Trading LLC is based in Chicago and specializes in equity index and commodity derivatives as a broker-dealer registered under the Securities Exchange Act of 1934.