Former bank natgas trader gets $500,000 fine-CFTC

WASHINGTON, Nov 6 (Reuters) - A former natural gas trader for the Bank of Montreal was fined $500,000 for lying about the profitability of his trading activities, the U.S. Commodity Futures Trading Commission said on Friday.

The fine settles charges the CFTC brought against David Lee of New Jersey for mismarking and misvaluing the natural gas options he traded for the Bank of Montreal (BMO.TO), and then lying to the bank about the trading.

The CFTC charged Lee with mismarking his natural gas options positions between at least May 2003 and May 2007 and for misvaluing other natural gas options positions from October 2006 until May 2007.

Lee inflated the value of the bank's natural gas holdings by $221.9 million as of January 2007 and by $257.8 million at the end of March 2007, according to the agency.

Lee and other brokers then deceived the bank by fabricating independent broker quotes delivered to the company's back office for price verification, the CFTC said.

By inflating the value of his gas positions, Lee generated a larger bonus for himself, while hiding the losses he incurred from his unprofitable trading.

In addition to the fine, Lee was also banned from carrying out any commodity trading in the future. (Reporting by Tom Doggett; editing by Jim Marshall)