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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.

				

			

			
						
					
			

	
		
		

			

				
				
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				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
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				 					 

						
Tagged in:
													  Fraud in CFTC-Regulated Markets, 
													  Misrepresentations, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 21, 2018

				 Forex trading firm Wright Time Capital Group LLC and its principal, Michael S. Wright, have been ordered to pay approximately $1.6 million in connection with a CFTC complaint charging that they fraudulently solicited investments in a commodity pool for foreign exchange trading, misrepresented that pool participants’ funds would be used to engaged in forex trading, misappropriated pool participants’ funds, and created false records that misrepresented trading returns and account values. CFTC				 					 

						
Tagged in:
													  Fraud in CFTC-Regulated Markets, 
													  Misrepresentations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 21, 2018

				 Newport Private Capital LLC and its principal, Jonathan Hansen, have been ordered to pay a $315,000 penalty for a "cherry-picking" scheme by which NPC entered multiple orders for commodity interests, but only allocated the orders to specific customer accounts after they were executed.  The defendants then preferentially allocated the transactions that turned out to be profitable to accounts in the name of Hansen's spouse, and not to the accounts of other NPC customers.  CFTC				 					 

						
Tagged in:
													  Fraud in CFTC-Regulated Markets, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 19, 2018

				 Following charges brought by the CFTC in 2016, Haena Park and companies affiliated with her, Phaetra Capital GP LLC, Phaetra Capital Management LP, and Argenta Group LLC, have been ordered to pay $23 million in restitution to defrauded investors in commodity pools operated by defendants.  Park made material misrepresentations and omissions concerning her trading expertise, and the defendants made and issued false documents to conceal their trading losses and misappropriations of investor funds, in addition to commingling funds and failing to operate the commodity pool as a separate legal entity.  CFTC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Misrepresentations, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 16, 2018

				 The CFTC and State of Utah have charged Rust Rare Coin, Inc. (RRC) and owner Gaylen Dean Rust for their roles in a precious metals Ponzi scheme. According to the DOJ press release, beginning in 2008 until only just recently, Rust fraudulently obtained over $170 million for RRC by lying to at least 200 investors in at least 17 states to get them to invest money in a silver pool. Investors were told the company's silver holdings amounted to between $77 to $80 million, and they stood to gain between 20-40% profit each year as a result of RRC’s buying and selling strategy. In reality, however, the defendants did not have nearly as much silver and were using investor contributions to pay other investors, as well as personal expenses. CFTC, UT AG				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Ponzi Schemes, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 8, 2018

				 Commerzbank AG agreed to pay a $12 million civil fine and adopt compliance procedures to settle CFTC charges that it failed to supervise its Swap Dealer's activities and made misleading statements and material omissions to the CFTC concerning its Swap Dealer’s operations and compliance with the CEA and CFTC Regulations.  The CFTC found that Commerzbank failed to adopt any effective process for determining whether swap transactions with certain non-U.S. swap counterparties were subject to Dodd-Frank, failed to report swap transactions to swap data repositories, failed to submit Large Trader Reports, and and failed to execute certain swaps on swap execution facilities, all in violation of application rules and regulations.  CFTC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 12, 2018

				 Former commodity traders Yuchun "Bruce" Mao, Kamaldeep Gandhi, and Krishna Mohan have been charged with commodities fraud and spoofing in a scheme that cost investors on the Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT) over $60 million in losses. Over the course of two years, the three allegedly placed thousands of orders and canceled them before execution in order to drive up demand. When defendant Gandhi moved onto another firm, he allegedly continued placing spoof orders. Along with defendant Mohan, Gandhi has agreed to plead guilty to the charges; no word yet on how Mao will plead. CFTC; DOJ; USAO SDTX				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Market Manipulation and Trading Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 11, 2018

				 Thomas C. Lindstrom, an options trader at Rock Capital Markets, LLC during the relevant time period, was permanently enjoined from trading or registering, in settlement of fraud charges against him.  Lindstrom, who was charged in 2016, engaged in trading activity which had the effect of falsely inflating the value and profitability of his options position, and misrepresented to his employer the quantity of options and the risk associated with his position. Lindstrom purchased thousands of deep out-of-the-money options, which settled each day at a minimum tick value prior to expiration, creating the appearance of millions of dollars in profits. He then purchased more out-of-money options to conceal the losses when the phony profits were wiped out.  CFTC				 					 

						
Tagged in:
													  Fraud in CFTC-Regulated Markets, 
													  Market Manipulation and Trading Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 11, 2018

				 A Washington couple will serve time in federal prison for defrauding investors of $12.7 million over the course of 7 years. Delving into their ties to various religious organization, Laurence Hong and Grace Hong convinced more than 55 clients to invest their life savings in a hedge fund that they called Pishon Holdings, by claiming that Laurence had experience investing vast sums of money on behalf of wealthy families and Grace had experience working for an investment firm. In fact, Laurence, also known as Sung Hong, had just completed a nearly 3 year sentence for investment fraud when he began the new scheme. With the funds they stole from investors, the couple paid for rent on a house, bought a yacht and multiple luxury vehicles (including an Aston Martin, BMW, Lamborghini, and Maserati), and went on extravagant family vacations to the Bahamas and Beverly Hills. Laurence will now serve another 15 years in prison, and Grace, also known as Hyun Joo Hong, will serve 6 years. They have also been ordered to pay restitution of more than $12.7 million. USAO WDWA				 					 

						
Tagged in:
													  Criminal Proceedings, 
													  Financial and Investment Fraud, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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