A former chief executive of the Optionable Inc commodities brokerage pleaded guilty for his role in a C$853 million (US$868 million) commodities trading scandal at Bank of Montreal .

Kevin Cassidy, 52, admitted to one count of conspiracy to commit wire fraud at a hearing Monday before U.S. District Judge Thomas Griesa in Manhattan.

Cassidy's plea agreement calls for a 30- to 37-month prison term under federal sentencing guidelines, which the judge need not follow, plus a fine. The Bedford Hills, New York resident also agreed to forfeit illegal profit. Cassidy was charged in November 2008 with six felony counts.

Lawrence Gelber, a lawyer for Cassidy, declined to comment. Optionable, now based in New York, did not respond to a request for comment.

Prosecutors had accused Cassidy of helping David Lee, Bank of Montreal's former lead commodities trader, inflate the fair market value of natural gas options positions in his derivatives trading portfolio from 2004 to 2007.

In return, they said Lee funneled trades to Cassidy, resulting in Bank of Montreal generating more than 40 percent of Optionable's brokerage revenue by early 2007.

When the scheme unraveled, Bank of Montreal stopped doing business with Optionable, causing the latter's shares to plunge after a more than sixfold gain in less than two years.

Prosecutors also accused Cassidy of defrauding the New York Mercantile Exchange in selling a 19 percent stake in Optionable, whose shares were inflated by revenue from Bank of Montreal, on April 10, 2007. This was less than three weeks before Bank of Montreal revealed its trading losses.

Lee pleaded guilty in November 2008 to charges of wire fraud, conspiracy, making false bank entries and obstruction.

His trading contributed to a C$853 million loss in Bank of Montreal's commodities trading business for 2007, which reduced profit by C$440 million (US$448 million).

While Optionable shares are still traded over the counter, the company has publicly reported no revenue since the third quarter of 2007, regulatory filings show.

Cassidy in 1996 pleaded guilty in a West Palm Beach, Florida federal court to credit card fraud, and was later sentenced to 30 months in prison, court records show.

The case is U.S. v. Cassidy, U.S. District Court, Southern District of New York, No. 11-01101.

(US$1 = C$0.983)

(Editing by Robert MacMillan)