Blog Posts Tagged With CFTC

CFTC Releases Annual Enforcement Results for Fiscal Year 2018 (Nov. 15, 2018)

The CFTC’s Division of Enforcement released its annual report reviewing enforcement actions from the 2018 fiscal year. According to the report, the Commission brought 83 enforcement actions and obtained more than $950 million in monetary sanctions.  The report noted key initiatives that began or continued during fiscal year 2018, including cooperation and self-reporting, data analytics, and the development of specialized task forces focused on four different substantive areas:  (1) spoofing and manipulative trading, (2) virtual
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CFTC v. Algointeractive Inc., et al. (S.D.N.Y. Nov. 13, 2018, Consent Order)

Action against Defendants, a hedge fund and its two principals, for alleged fraudulent solicitations and misappropriation of investor funds. According to the CFTC, Defendants misrepresented to investors their level of experience and plans to invest funds in futures contracts. The CFTC alleges that Defendants instead used investor funds for their personal benefit and concealed losses in communications to investors. The CFTC also alleges that Defendants failed to register their commodity pool. One Defendant principal has
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SEC v. Gaylen D. Rust and Rust Rare Coin, Inc. (D. Utah Nov. 15, 2018, Contested) and CFTC and Utah Division of Securities v. Rust Rare Coin Inc. and Gaylen Dean Rust (D. Utah Nov. 13, 2018, Contested)

Actions against Defendants, a trader and a rare coin company, for an alleged fraudulent investment scheme. According to the SEC and CFTC, Defendants misled investors by making false statements about a silver trading program. The SEC and CFTC allege that Defendants used investor funds to make Ponzi-like payments to earlier investors and to pay for Defendant trader’s personal and business expenses.

SEC Litigation Release

SEC Complaint 

CFTC Press Release 

CFTC Complaint
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In re Commerzbank AG (A.P. Nov. 8, 2018, Settled)

Action against Respondent, a banking and financial services company, for alleged violations of the Commodity Exchange Act and CFTC regulations. According to the CFTC, Respondent failed to supervise the activities of its swap dealers and made material misstatements and omissions to the CFTC about operations and regulatory compliance for these dealers. Respondent has agreed to pay a $12 million civil penalty and has also agreed to remediation and monitoring measures.

CFTC Press Release

CFTC Order
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In re Joseph Kim (A.P. Oct. 29, 2018, Settled)

Action against Respondent, a former virtual currency trader, for an alleged investment scheme and misappropriation of his employer’s virtual currencies. According to the CFTC, Respondent misappropriated Bitcoin and Litecoin from the trading firm where he worked. The CFTC further alleges that Respondent falsely solicited investors for funds that he then lost by executing high-risk virtual currency trades. Respondent has agreed to pay restitution of $1,146,000 and post-judgment interest and to permanent trading and registration bars.
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CFTC v. Thomas C. Lindstrom (N.D. Ill. Oct. 4, 2018, Consent Order)

Action against Defendant, a Treasury note trader, for alleged fraud in connection with trading in 10-year U.S. Treasury note futures options. According to the CFTC, Defendant inflated the value of his purchased options in order to receive larger profit shares from his employer. Defendant has agreed to pay $13,981,478 in restitution and $855,000 in civil penalties. Defendant has plead guilty in a parallel criminal proceeding.

CFTC Press Release

CFTC Order
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CFTC v. Kevin Scott Antonovich (E.D.N.Y. Oct. 3, 2018, Consent Order)

Action against Defendant trader for alleged misappropriation of investor funds, fraudulent solicitation, and registration violations. According to the CFTC, Defendant misappropriated funds that he fraudulently solicited from participants in a commodity pool of off-exchange binary options. The CFTC alleges that Defendant made false and misleading representations to participants regarding the use of funds and falsified documents related to available funds. Defendant has agreed to pay $554,375 in restitution and civil penalties.

CFTC Press Release

CFTC
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CFTC v. Aaron Michael Scott (W.D. Wash. Oct. 3, 2018, Contested)

Action against Defendant, an owner, president, and secretary of a defunct precious metal dealer, for a fraudulent scheme in connection with sales of precious metals. The CFTC alleges that customers paid Defendant in exchange for precious metals, but Defendant misappropriated these funds. The CFTC also alleges that Defendant made various misrepresentations to customers about inventory and use of funds.

CFTC Press Release
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CFTC v. Gelfman Blueprint, Inc. and Nicholas Gelfman (S.D.N.Y. Oct. 1, 2018, Consent Order)

Action against Defendants, a Bitcoin hedge fund and its CEO, for alleged operation of a Bitcoin Ponzi scheme.  According to the CFTC, Defendants promised to use investor funds in a high-frequency algorithmic trading strategy but instead used the funds to make payouts to other investors.  The CFTC also alleges that Defendants falsified performance reports and staged a computer hack to conceal trading losses and misappropriation of investor funds.  Defendant company has agreed to pay restitution
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In re Jacob Bourne (A.P. Sep. 28, 2018, Settled)

Action against Respondent, a former managing director of the inflation desk at a financial services company, for alleged mismarking of swap valuations. According to the CFTC, Respondent concealed trading losses by entering false swap valuations into an internal spreadsheet and later tried to conceal this misconduct by falsifying versions of the spreadsheet. Respondent has agreed to pay a $350,000 civil penalty, post-judgment interest, and to permanent trading and registration bars. The CFTC has closed a
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CFTC v. Lucrative Pips Corporation and Kevin Perry (N.D. Ga. Sept. 28, 2018, Contested)

Action against Defendants, a company and its founder and CEO, for alleged commodity fraud and misappropriation related to a scheme in certain off-exchange forex contracts.  According to the CFTC, Defendants falsely represented their trading strategy and returns while soliciting customers and lost or misappropriated the funds obtained from investors.

CFTC Press Release
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CFTC v. John Doe 1 a/k/a Morgan Hunt dba Diamonds Trading Investment House and John Doe 2 aka Kim Hecroft dba First Options Trading (N.D. Tex. Sept. 28, 2018, Contested)

Action against Defendants for alleged fraudulent scheme to solicit Bitcoin.  According to the CFTC, Defendants misappropriated customer funds after making false or misleading representations or omissions about their planned investment of funds in forex contracts, binary options, and diamonds. The CFTC further alleges that Defendants forged account statements and documents and impersonated a CFTC investigator.

CFTC Press Release
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CFTC v. TFS-ICAP, LLC, et al. (S.D.N.Y. Sept. 28, 2018, Contested)

Action against Defendants, an interdealer broker joint venture, its Global Head of Emerging Markets FX Options, and its CEO, in connection with alleged deception of clients through the use of fake bids, offers, and trades in the forex options market.  The CFTC alleges that senior managers encouraged or knowingly allowed the misconduct to continue and that Defendant CEO knew or had reason to know of the practices but failed to take steps to prevent them.
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In re Michael Leibowitz (A.P. Sept. 28, 2018, Settled)

Action against Respondent, Chairman of the Board of an interdealer foreign exchange options broker, for alleged failure to diligently supervise forex options trades by the emerging options desk.   According to the CFTC, brokers engaged in fake bids, offers, and trades to misrepresent the level of liquidity and encourage customers to trade.  The CFTC further alleges that senior managers had reason to know that this practice was ongoing and that Respondent failed to implement any policies
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CFTC v. EOX Holdings LLC and Andrew Gizienski (S.D.N.Y. Sept. 28, 2018, Contested)

Action against Defendants, an introducing broker and one of its associated persons, for alleged misuse of material nonpublic information related to their customers.  According to the CFTC, Defendant associated person provided a friend with confidential customer information and executed trades for his friend’s account while in possession of that information.  The CFTC also alleges that Defendant broker failed to maintain certain required records, diligently supervise its employees, and institute policies and procedures to monitor trading
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In re Davis Ramsey (A.P. Sept. 27, 2018, Settled)

Action against Respondent, a futures trader, for alleged scheme to influence the prices of futures contracts on two exchanges.  According to the CFTC, Respondent engaged in futures market transactions to improve binary contracts positions he held that were traded on Nadex.  Respondent has agreed to pay disgorgement of $250,636.25 and a civil penalty of $325,000.

CFTC Press Release 

CFTC Order
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CFTC v. 1pool Ltd. and Patrick Brunner (D.D.C. Sept. 27, 2018, Contested)

Action against Defendants, an online trading platform company and its CEO and owner, in connection with alleged illegal retail commodity transactions, failure to register as a Futures Commission Merchant, and failure to implement procedures to prevent money laundering.  According to the CFTC, Defendants failed to conduct certain transactions in compliance with the Commodity Exchange Act, and Defendant company, through Defendant CEO and others, acted as a Futures Commission Merchant by soliciting or taking orders for
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CFTC v. Timothy J. Atkinson, et al. (S.D.N.Y. Sept. 27, 2018, Contested); et al.

CFTC v. Timothy Joseph Atkinson, et al. (S.D.N.Y. Sept. 27, 2018, Contested); CFTC v. Ronald Montano, et al. (S.D.N.Y. Sept. 27, 2018, Contested); In re Grayson Brookshire (A.P. Sept. 27, 2018, Settled); In re Antonio Giacca (A.P. Sept. 27, 2018, Settled); In re Travis Stephenson (A.P. Sept. 27, 2018, Settled); In re Justin Blake Barrett (A.P. Sept. 27, 2018, Settled); In re Shmuel Pollen (A.P. Sept. 27, 2018, Settled); In re William Earl Berry and
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In re Peter Grady (A.P. Sept. 26, 2018, Settled); In re Adam Flavin (A.P. Sept. 26, 2018, Settled)

Actions against Respondents, two traders at a commodity merchandising firm, for alleged attempts to manipulate the price of wheat futures and options contracts.  According to the CFTC, Respondents and others attempted to manipulate the price of particular wheat futures and options contracts through the purchase and cancellation of wheat shipping certificates.  The first Respondent trader has agreed to pay a civil penalty of $125,000, and the second Respondent trader has agreed to pay a civil
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In re Kooima Kaemingk, et al. (A.P. Sept. 26, 2018, Settled)

Action against Respondents, a registered introducing broker, its Vice President and co-owner, and its President and co-owner, in connection with Respondent Vice President’s alleged fraud, unauthorized trading, and false and misleading statements to a financial market company; a former employee’s fraud, unauthorized trading, and violation of the financial market company’s position limits in certain futures contracts; and for Respondents’ supervision failures.  Respondents have agreed to pay, jointly and severally, restitution of $11,920,857.50 and a civil
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CFTC v. Gregory L. Gramalegui (D. Colo. Sept. 26, 2018, Contested)

Action against Defendant individual for alleged fraudulent solicitations of customers for a futures trading system and advisory service. According to the CFTC, Defendant made material misrepresentations to customers about the effectiveness of the system and service. The CFTC also alleges that Defendant did not provide required advertising disclosures and made false statements to the CFTC during its investigation. The court has ordered $480,690.17 in disgorgement and $1,442,070.51 in civil penalties.

CFTC Press Release

CFTC Order
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CFTC v. Yehuda L. Belsky and Y Trading, LLC (E.D.N.Y. Sept. 26, 2018, Contested)

Action against Defendants, a company and its sole owner, for alleged fraudulent solicitations, false statements to the CFTC about this trading, and failure to register with the CFTC as a Commodity Trading Advisor.  According to the CFTC, Defendant owner solicited funds from customers to trade binary options on their behalf by making false and misleading claims that he was an experienced and successful trader.  The CFTC also alleges that Defendant owner violated a 2008 CFTC
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