Blog Posts Tagged With CFTC

In re Benjamin Cox (A.P. July 31, 2019, Settled)

Action against Respondent, a commodities trader, for alleged spoofing.  According to the CFTC, Respondent placed orders for futures contracts with the intent to cancel them before execution in order to manipulate prices.  Respondent has agreed to pay a civil penalty of $150,000 and a three-month trading suspension.

CFTC Order

CFTC Press Release
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In re Curtis Dalton d/b/a Binary International (A.P. July 29, 2019, Settled)

Action against Respondent, the principal of a binary-options issuer, for alleged registration failures.  According to the CFTC, Respondent solicited and accepted orders for foreign-currency binary options on an unregistered trading platform.  The CFTC has reserved decision on monetary sanctions pending Respondents’ fulfillment of their cooperation agreements with the CFTC.  Respondent has agreed to pay a civil penalty of $200,000 and to trading and solicitation bars.

CFTC Order

CFTC Press Release
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In re Corey D. Flaum (A.P. July 25, 2019, Settled); In re John Edmonds (A.P. July 25, 2019, Settled)

Action against Respondents, former precious-metals traders, for alleged spoofing.  According to the CFTC, Respondents placed orders for futures contracts with the intent to cancel them before execution in order to manipulate prices.  The CFTC has reserved decision on monetary sanctions pending Respondents’ fulfillment of their cooperation agreements with the CFTC.  Respondents have pleaded guilty in parallel criminal proceedings.

CFTC Order (Flaum)

CFTC Order (Edmonds)

CFTC Press Release
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In re Swapnil Rege (A.P. July 18, 2019, Settled)

Parallel enforcement actions against Respondent, a former employee of an investment advisor, for alleged fraud.  According to the SEC and CFTC, Defendant mispriced interest-rate swaps and swap options to inflate the returns of funds that the advisor managed, which in turn inflated the advisor’s fees.  Respondent has agreed to pay disgorgement of $600,000, prejudgment interest of $49,170.84; and a civil penalty of $100,000 to resolve the SEC action; to pay a $100,000 civil penalty to
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In re Korea Exchange Inc. (A.P. July 12, 2019, Settled)

Action against Respondent, a South Korea based exchange, for allegedly submitting a misleading certification to the CFTC.  According to the CFTC, Respondent represented that it was in compliance with the requirements of a CFTC exemptive order after it had discovered its policies and practices were inconsistent with the required standards.  Respondent has agreed to pay a civil monetary penalty of $150,000 plus post-judgment interest.

CFTC Order

CFTC Press Release
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In re ADM Investor Services Inc. (A.P. July 12, 2019, Settled)

Action against Respondent, a registered futures commission merchant located in Chicago, for alleged failure to supervise the handling of commodity interest accounts.  According to the CFTC, Respondent’s supervisory system failed to ensure employees and agents executed a number of orders properly.  Respondent has agreed to pay a civil money penalty of $250,000 plus post-judgment interest.

CFTC Order

CFTC Press Release
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In re William Dean Katzelis and Shahin Maleki d/b/a Essex Futures (A.P. July 12, 2019, Settled)

Action against Respondents, a registered guaranteed introducing broker and its principals, for allegedly improperly combining proprietary and customer trades in bunched orders for execution and alleged record-keeping violations.  The CFTC also alleges that Respondents engaged in unauthorized trading by exercising trading discretion over customer accounts for which they did not have powers of attorney or specific authorizations.  Respondents have agreed to pay a civil monetary penalty of $500,000 plus post-judgment interest.

CFTC Order

CFTC Press
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In re Vision Financial Markets LLC (A.P. July 12, 2019, Settled)

Action against Respondent, a securities broker-dealer and former registered futures commission merchant and commodity pool operator, for alleged failure to supervise the handling of commodity interest accounts.  According to the CFTC, Respondent’s supervisory system failed to ensure employees and agents executed a number of orders properly.  Respondent has agreed to pay a civil money penalty of $200,000 plus post-judgment interest.

CFTC Order

CFTC Press Release
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In re Elephas Investment Management Ltd. (A.P. July 2, 2019, Settled)

Action against Respondent, a Hong Kong-based hedge fund, for alleged violation of wheat futures speculative position limits.  According to the CFTC, Respondent held a long position in the Chicago Board of Trade’s December 2017 soft red winter wheat futures contract in excess of the spot month speculative position limit established by the CFTC.  Respondent has agreed to pay a civil money penalty of $160,000 plus post-judgment interest.

CFTC Order

CFTC Press Release
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CFTC v. John Doe 1 a/k/a Morgan Hunt d/b/a Diamonds Trading Investment House, and John Doe 2 a/k/a Kim Hecroft d/b/a First Options Trading (N.D. Tex. June 28, 2019, Contested)

Action against Defendants, traders and portfolio managers, for an alleged fraudulent investment scheme.  According to the CFTC, Defendants solicited Bitcoin from investors and falsely claimed they would use the funds for their investors’ benefit.  The CFTC also alleges that Defendants misrepresented their experience and track records and misappropriated investor funds.  The court ordered that Defendant Hunt pay restitution of $3,941.35 plus post-judgment interest and a civil monetary penalty of $180,000.  The court also ordered that
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In re Eagle Market Makers, Inc. (A.P. June 28, 2019, Settled)

Action against Respondent, a commodities trading firm, for alleged noncompetitive wash sales.  According to the CFTC, Respondent circumvented the “lockdown” period before market open, during which pre-open orders cannot be modified or cancelled.  The CFTC alleges that Respondent improperly placed additional, offsetting orders to cancel its pre-open orders, which resulted in noncompetitive wash sales upon market open.  Respondent has agreed to pay a civil penalty of $350,000.

CFTC Order

CFTC Press Release
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In re Merrill Lynch Commodities, Inc. (A.P. June 25, 2019, Settled)

Action against Respondent, a provisionally registered swap dealer, for alleged spoofing.  According to the CFTC, Respondent placed orders for futures contracts with the intent to cancel the orders before execution in order to manipulate prices.  Respondent has agreed to pay restitution of $2,364,585, disgorgement of $11,100,000, and a civil penalty of $11,500,000.

CFTC Order

CFTC Press Release
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The Kane Capital Investment Group, LLC, and Amrit Jaswant Singh Chahal (E.D.V.A. June 20, 2019, Settled)

Action against Defendants, a commodity pool operator and its principal, for alleged fraud.  According to the CFTC, Defendants solicited investor funds based on false claims about the pool’s trading profits and size, among other misrepresentations.  The CFTC further alleges that Defendants misappropriated investor funds and made Ponzi-like payments to earlier investors.  Defendants have agreed to pay restitution of $1,232,510.41. Defendant principal has pleaded guilty to fraud charges in a parallel criminal action and has been
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CFTC v. Control-Finance Limited and Benjamin Reynolds (S.D.N.Y. June 17, 2019, Contested)

Action against Defendants, a U.K-based Bitcoin trading and investment company and its principal, for an alleged $147 million Ponzi and pyramid scheme.  According to the CFTC, Defendants made false guarantees of daily trading profits and other misrepresentations to induce investors to purchase Bitcoin and transfer the Bitcoin to Defendants.  The CFTC alleges that Defendants made no trades on investors’ behalf and instead misappropriated investor funds to, for example, make Ponzi-like payments to earlier investors.  The
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CFTC v. Fabio Bretas de Freitas, et al. (S.D.N.Y. May 9, 2019, Contested)

Action against Defendants and Relief Defendants, a commodity pool operator, his companies, and related entities, for alleged fraud and misappropriation. According to the CFTC, Defendants solicited investor funds for commodity pools and futures funds based on false claims of high returns and investment capabilities. The CFTC alleges that Defendants falsified account statements, misappropriated investor funds, and made Ponzi-like payments to earlier investors. The CFTC further alleges that Defendant operator made false statements to the National
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CFTC v. William Thomas Caniff, et al. (N.D. Ill. May 3, 2019, Contested)

Action against Defendants, a binary options trading firm, its principals, and related entities, for alleged fraudulent solicitation. According to the CFTC, Defendants solicited investor funds through false statements that these funds would be used to trade binary options on the North American Derivatives Exchange (NADEX). The CFTC alleges that Defendants instead misappropriated the majority of the funds. The CFTC further alleges that Defendants filed a false statement with NADEX and issued false account statements to
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United States v. Matthew Connolly and Gavin Campbell Black (S.D.N.Y. May 2, 2019, Contested)

Judge Colleen McMahon ruled that interviews conducted during an internal investigation by a defendant’s employer and its counsel at the request of the CFTC were “fairly attributable” to the CFTC.  The court determined that, under Second Circuit precedent,[1] the CFTC’s request that the employer conduct an internal investigation and interview one of the defendants was a government directive, given the pressure that the defendant felt to cooperate.  Accordingly, the use of a criminal defendant’s
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CFTC v. Oasis International Group, Limited, et al. (M.D. Fla. Apr. 15, 2019, Contested)

Action against Defendants, financial management companies and their principals, for alleged fraud against investors. According to the CFTC, Defendants falsely represented to investors that their funds would be used for pooled investments in retail forex. The CFTC alleges that Defendants instead misappropriated the funds for personal use and to make Ponzi-like payments to other investors. The CFTC further alleges that Defendants issued false account statements to pool participants.

CFTC Complaint 

Press Release
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CFTC and UK Authorities Issue Joint Statement on Continuity of Derivatives Trading and Clearing Post-Brexit (Feb. 25, 2019)

The CFTC and the Bank of England, including the Prudential Regulation Authority and the Financial Conduct Authority, issued a joint statement assuring the market that derivative trading and clearing activities will continue between the U.K. and U.S. after the U.K.’s withdrawal from the EU. The statement sets out a list of measures to ensure regulatory and financial stability, including continued supervisory cooperation, extension of existing CFTC relief and comparability for the U.K., and U.K. equivalence
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CFTC v. The Tulving Company, Inc. and Hannes Tulving, Jr. (W.D.N.C. Nov. 29, 2018, Consent Order)

The U.S. District Court for the Western District of North Carolina entered a supplemental consent order against Defendants, an individual and his precious metals company, for alleged fraudulent solicitation of customers for precious metals transactions, misappropriation of customer funds, and false statements about purported transactions.  The Court’s supplemental order requires Defendants to pay, jointly and severally, a civil penalty of $15,761,432.  The supplemental consent order followed the Court’s consent order of permanent injunction and its
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CFTC v. Pishon Holdings, LLC, et al. (W.D. Wash. Dec. 27, 2018, Default Judgment Order)

Action against Defendants, a husband, wife, and their futures trading company, for alleged misappropriation and fraud.  According to the CFTC, Defendants solicited investor funds based on misrepresentations about the amount of money they managed, prior investment success, the structure of trading fees, and Defendant husband’s prior fraud conviction.  The CFTC also alleges that Defendants misappropriated investor funds for personal expenses.  The court entered a default judgment requiring Defendants to pay, jointly and severally, restitution of
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