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CFTC Enforcement Actions

The Commodity Futures Trading Commission (CFTC) is the United States agency with primary responsibility for enforcing the Commodity Exchange Act (CEA) and regulating commodity futures and related markets. Whistleblowers with knowledge of violations of laws and regulations enforced by the CFTC can submit a claim under the CFTC Whistleblower Reward Program, and may be eligible to receive a monetary reward and protection against retaliation by employers.

Below are summaries of recent CFTC settlements or successful enforcement actions. If you believe you have information about fraud which could give rise to a CFTC enforcement action and claim under the CFTC Whistleblower Reward Program, please contact us to speak with one of our experienced whistleblower attorneys.

May 6, 2019

The CFTC announced it awarded $1.5 million to a single whistleblower. According to the CFTC’s press release, the award related to both a CFTC action and a related action brought by another federal regulator, and, per program rules, was between 10-30% of the amount the government recovered. CFTC

May 3, 2019

The CFTC has filed a civil enforcement action against two men and their company, Berkley Capital Management, LLC (BCM), which operates two binary options trading pools, BBOT 1, LP and Berkley II, LP.  In order to open pool accounts with the North American Derivatives Exchange (NADEX), defendants Arie Bos of the Netherlands and William Caniff of the U.S. submitted false statements to conceal Caniff’s criminal background, then misappropriated at least $2.3 million from more than $4.8 million that was fraudulently solicited from the pools’ 62 participants.  CFTC

April 29, 2019

In an enforcement action initiated by the CFTC, Michael Shah and Zilmil, Inc., both of Jacksonville, Florida, have been ordered to pay nearly $23 million for their roles as "affiliate marketers" for unregistered binary options trading schemes, targeting consumers with false and misleading advertising for the trading systems.  CFTC

April 2, 2019

After being charged in 2017, Thomas Lanzana, Blackbox Pulse, LLC, Nikolay Masanko, and White Cloud Mountain, LLC have been ordered to pay more than $2.7 million in restitution and civil penalties in connection with their marketing of a foreign exchange trading scheme through which they fraudulently solicited and accepted funds from customers for the purported purpose of trading forex in a commodity pool.  In fact, defendants misappropriated customers' funds, fabricated account statements, and misrepresented trades and balances.  CFTC

March 18, 2019

Royal Metals Group, LLC, and part owner, Chelsea Gless have been ordered by the U.S. District Court for the Southern District of New York to pay over $2.3 million for fraudulent misrepresentations and misappropriation of customer funds in a precious metals scheme.  The order requires the defendants to pay restitution of $584,549.84 to defrauded customers and a $1,753,647 civil monetary penalty. The defendants are also permanently banned from trading regulated commodities and registering with the CFTC. CFTC    

March 11, 2019

Marshall Islands-based 1pool Ltd. and its chief executive officer and owner, Patrick Brunner, will pay $990,000 to resolve a CFTC action alleging that they illegally offered retail commodity transactions that were margined in bitcoin, failed to register as a futures commission merchant (FCM), and failed to have required anti-money laundering procedures in place. The settlement payment consists of a $175,000 civil monetary penalty, disgorgement of $246,000 in gains, and restitution of approximately $570,000 to U.S. customers.  CFTC

March 4, 2019

The CFTC announced an award of $2 million to an individual whistleblower under its Whistleblower Program. The CFTC revealed that the individual was not an insider, had provided expert analysis of market data, and received an award at least in part based on related actions brought by non-CFTC federal regulators.  As is their usual practice, the CFTC did not release further details about the case. CFTC

February 21, 2019

Precious metals dealer Hannes Tulving, Jr. and The Tulving Company, Inc., have been ordered to pay a civil monetary penalty of $15.7 million, having been charged with fraudulent solicitation and misappropriation in 2015.  Between 2013 and 201, defendants fraudulently held themselves out as a reputable dealer in gold, silver, platinum, and palladium bullion and coins, soliciting more than $150 million in funds from 381 people.  Tulving then misappropriated funds for unauthorized uses and failed to purchase or deliver the metals to customers.  In 2016, Tulving was sentenced to 30 months in prison.  CFTC

January 31, 2019

The CFTC suspended Chicago trader Kevin Crepeau and ordered him to pay a $120,000 for engaging in spoofing in the Chicago Mercantile Exchange (CME) soybeans futures market. According to the CFTC, Crepeau placed orders to buy or sell futures contracts on soybeans, soybean meal, and soybean oil with the intent to cancel to induce other market participants to fill his other orders on the opposite side of the market.  Then, he cancelled the fake orders after his genuine orders had been filled. CFTC

December 21, 2018

Lon Olen Friedrichsen of Alton, Iowa, has been ordered to pay $2.1 million following a CFTC complaint alleging that he improperly solicited customers to obtain access to their futures trading accounts by misrepresenting his registration and experience.  Friedrichsen then ran up substantial losses in the customer accounts, but created false statements to conceal those losses.  CFTC
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