The COMEX'S reply and my response

(Oct 31, 2001)
Dear Mr. Butler:
      This letter concerns your letter dated October 8, 2001 addressed to Vincent Viola and J. Robert Collins of the New York Mercantile Exchange (the "Exchange"). As I stated to you in a previous response which addressed your concerns regarding the COMEX division Silver contract, the Exchange continues not concur with your subjective conclusions. We actively monitor activity in all our contract markets and rigorously enforce all Exchange rules. I would refer you to my previous response for additional points which I continue to stand by. Further, I have openly disclosed the content of your past and current letters sent to the Exchange with CFTC staff in Washington to their satisfaction.

Sincerely,
Thomas LaSala
Vice President
Compliance Department

November 5, 2001

Dear Mr. Viola and Mr. Collins:

I have received a response to my letter of Oct 8, 2001, from Mr. Thomas LaSala, of your Compliance Department. I am disappointed that his letter was completely unresponsive to my specific allegation that the price of silver was manipulated in the aftermath of the World Trade Center tragedy, by the uneconomic naked short sale of almost 200 million ounces net, by a handful of insider dealers.

Just to be clear, it is not just the handful of dealer member firms who are violating speculative position limit law, it is also the large non-commercials on the long side, and the technical funds who trade both the long and short side in amounts of contracts beyond the clear intent of commodity law. Real producers and consumers have no influence on the price of silver, due to the speculative excesses you allow. This is against the law.

While Mr. LaSala wrote that he had "openly discussed" the issues with the Commodity Futures Trading Commission in Washington, DC, neither your exchange, nor the CFTC, appear willing to discuss the issues publicly. This is shameful. You had an opportunity to clean house or explain publicly why my allegations were wrong. Instead, you chose to deny the public a full airing of the issues. Let me remind you that your exchange is licensed by and operates only with the approval of the United States Congress. They certainly did not intend that your exchange be a private club, nor be above the law.

Ted Butler