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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.

				

			

			
						
					
			

	
		
		

			

				
				
September 28, 2021

				 Interactive Brokers LLC has been ordered to pay $1.75 million in civil monetary penalty and $82.57 million in restitution for violating CFTC Regulation 166.3 in failing to supervise the handling of customer accounts.  According to the CFTC, Interactive Brokers was aware of the possibility of negative oil futures prices but failed to prepare and configure its electronic trading system to display those prices or allow customers to place buy and sell orders with negative-priced limits.  Subsequently, customers suffered losses in excess of $82.57 million.  CFTC				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 27, 2021

				 Citibank, N.A. and Citigroup Global Markets Limited, which are provisionally registered swap dealers, will pay a $1 million civil penalty to resolve allegations that they failed to properly report Legal Entity Identifier information to a swap data repository as required by applicable regulations.  In addition, Citi was found to have supervisory failures and to be out of compliance with a prior 2017 order on related matters.  CFTC				 					 

						
Tagged in:
													  CFTC Whistleblower Reward Program, 
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 25, 2021

				 Default judgment was entered against Silver Star FX, LLC d/b/a Silver Star Live, Silver Star Live Software LLC, and David Wayne Mayer based on findings that, acting as unregistered commodity trading advisors, they fraudulently solicited customers to open discretionary foreign exchange trading accounts that would purportedly use an automated trading software developed by Mayer.  Defendants misrepresented Mayer's qualifications and trading experience, as well as the trading system's performance history and expected profits.  Defendants were ordered to pay $3.9 million in restitution and $11.7 million in civil monetary penalties.  CFTC				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 23, 2021

				 Charles McAllister was ordered to pay $16.2 million in restitution to resolve claims arising from his operation of BullionDirect, Inc., which promised customers that it would purchase precious metals on their behalf, and deliver or store that metal. In fact, however, McCallister and BullionDirect did not purchase or store metal for customers, but instead misappropriated customer funds to pay back other customers, cover business expenses, and invest in other businesses.  Defendants sent false account statements to customers to conceal the fraud.  In 2019, McAllister was sentenced to 10 years in prison.  CFTC				 					 

						
Tagged in:
													  Criminal Proceedings, 
													  Fraud in CFTC-Regulated Markets, 
													  Misrepresentations, 
													  Ponzi Schemes, 
												
						

					
	
							
	
		
		
	


 			


 			




	
		
		

			

				
				
August 10, 2021

				 The principles of the Global Trading Club, Mayco Alexis Maldonado Garcia, Cesar Castaneda, and Joel Castaneda Garcia, consented to an order requiring payments totaling $1.75 million in restitution and civil penalties.  The CFTC alleged that the individual falsely represented that GTC employed “master traders” in cryptocurrency transactions, promised returns to customers, and caused misleading trading statements to be posted online.  The order bars the individuals from registering with the CFTC and from trading commodity interests.  CFTC				 					 

						
Tagged in:
													  Cryptocurrency, 
													  Fraud in CFTC-Regulated Markets, 
													  Misrepresentations, 
													  Ponzi Schemes, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 10, 2021

				 Five companies that operate the BitMEX cryptocurrency platform will pay a total of $100 million to resolve claims that the platform operated a facility to trade or process swaps without being approved as a Designated Contract Market (DCM) or a Swap Execution Facility (SEF), operated as an unregistered futures commission merchant (FCM), and failed to implement anti-money laundering procedures.  HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited jointly operated BitMEX, which offered leveraged trading of cryptocurrency derivatives, including to customers in the U.S.  BitMEX acted as a counterparty in certain transactions, and accepted bitcoin to margin digital asset derivative transactions.  BitMEX allowed customers to access its platform and conduct derivative trading without verifying customer identity beyond the collection of an email address, and failed to report suspicious activity as required. As part of the settlement, BitMEX certified that it terminated its U.S. business operations, barred access to the platform by U.S. customers, and had undertaken verification procedures for existing customers.  $50 million of the $100 million penalty will be paid to the CFTC, with $30 million of the remainder paid immediately to FinCEN, and an additional $20 million to FinCEN suspended pending defendants’ undertaking of specific compliance procedures.  CFTC; FinCEN				 					 

						
Tagged in:
													  Cryptocurrency, 
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Money Laundering, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 12, 2021

				 A non-bank institution in Georgia called GreenSky, LLC has been ordered to refund or cancel up to $9 million in fraudulent loans, pay a $2.5 million civil penalty, and implement new procedures to prevent future financial abuse.  According to the CFTC, GreenSky’s inappropriate and ineffective controls enabled third-party merchants to take out loans on behalf of thousands of consumers without their knowledge or authorization.  In addition to the financial resolution, GreenSky is now required to verify consumer identities and confirm authorizations before activating or disbursing loans, implement a consumer complaint management program, and properly oversee third-party merchant partners.  CFTC				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 25, 2021

				 Three Credit Suisse entities—Credit Suisse International, Credit Suisse Securities Europe Limited, and Credit Suisse Capital LLC—have been ordered to pay a $1.5 million civil monetary penalty to resolve charges of failing to comply with swap data reporting obligations between 2013 and 2018.  Specifically, the entities reported the mark-to market notational value of underlying equity rather than the daily mark of certain equity swap transactions.  The failure resulted in errors in the majority of the reportable equity swap transactions submitted to the swap dealer repository.  CFTC				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 3, 2021

				 The CFTC obtained a default judgment against Florida resident James Frederick Walsh, who was ordered to pay a penalty of more than $500,000.  Walsh, who was not registered with the CFTC, marketed himself through social media as an experienced foreign exchange trader who could conduct retail forex trades for customers.  Walsh advertised that the COVID-19 pandemic created an opportunity for increased forex trading profits,  guaranteed returns, and claimed to have inside information about forex markets.   CFTC				 					 

						
Tagged in:
													  COVID-19, 
													  Foreign Exchange, 
													  Fraud in CFTC-Regulated Markets, 
													  Misrepresentations, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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