Regulatory Violations

September 29, 2017

The Commodity Futures Trading Commission (CFTC) on September 28, 2017, filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Hasan Sarwar a/k/a Alexander Sarwar (d/b/a Profit Management Int) of Rancho Cucamonga, California, and his spouse Rachida Elfrimi (d/b/a Profit Management). The CFTC Complaint charges the Defendants with defrauding commodity pool participants, making Ponzi-style payments to pool participants from other participants’ funds, comingling of pool funds, and failing to register with the CFTC as Commodity Pool Operators, as required. CFTC

September 28, 2017

The Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Morgan Stanley & Co. LLC (MSCO), a Delaware limited liability company headquartered in New York City, for failing to diligently supervise the reconciliation of exchange and clearing fees with the amounts it ultimately charged customers for certain transactions on the CME Group, ICE Futures US, and other exchanges. MSCO is registered with the CFTC as a Futures Commission Merchant and a provisionally registered Swap Dealer. The CFTC Order requires MSCO to pay a $500,000 civil monetary penalty and cease and desist from violating the CFTC Regulation governing diligent supervision. CFTC

September 28, 2017

The Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Connecticut-based Tillage Commodities, LLC (Tillage), a Commodity Pool Operator (CPO), for failure to supervise its fund administrator’s operation of the commodity pool’s bank account containing pool participants’ funds. Tillage has been registered as a CPO with the CFTC since 2013, with its principal office located in Stamford, Connecticut. The CFTC Order requires Tillage to pay a $150,000 civil monetary penalty and to cease and desist from further violations of the Commodity Exchange Act, as charged. CFTC

September 25, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Citibank, N.A. (CBNA) and Citigroup Global Markets Limited (CGML) (collectively, Citi), for failing to report Legal Entity Identifier (LEI) information for swap transactions properly to a Swap Data Repository (SDR), failing to establish the electronic systems and procedures necessary to do so, failing to correct errors in LEI data previously reported to an SDR, and failing to perform supervisory duties diligently with respect to LEI swap data reporting, all in violation of CFTC Regulations. CFTC; subsequent proceedings

September 22, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Merrill, Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch), a registered Futures Commission Merchant, for failing to supervise its employees’ and agents’ handling of the firm’s response to a CME Group Inc. (CME Group) investigation into futures block trade execution and recordkeeping practices at Bank of America, N.A. (BANA), a Merrill Lynch affiliate. The CFTC Order also finds that Merrill Lynch did not have adequate procedures to ensure that its employees and agents prepared and maintained accurate records of futures block trades executed by BANA and that Merrill Lynch failed to maintain records of certain futures block trades executed by BANA as required by Commission Regulations. CFTC

September 21, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a federal civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Nicholas Gelfman, of Brooklyn, New York, and Gelfman Blueprint, Inc. (GBI), a New York corporation, charging them with fraud, misappropriation, and issuing false account statements in connection with solicited investments in Bitcoin, a virtual currency. The CFTC Complaint alleges that from approximately January 2014 through approximately January 2016, GBI and Gelfman, company Chief Executive Officer and Head Trader, operated a Bitcoin Ponzi scheme in which they fraudulently solicited more than $600,000 from approximately 80 persons, supposedly for placement in a pooled commodity fund that purportedly employed a high-frequency, algorithmic trading strategy, executed by Defendants’ computer trading program called “Jigsaw.” In fact, as charged in the CFTC Complaint, the strategy was fake, the purported performance reports were false, and — as in all Ponzi schemes — payouts of supposed profits to GBI Customers in actuality consisted of other customers’ misappropriated funds. CFTC

September 6, 2017

– The U.S. Commodity Futures Trading Commission (CFTC) announced that on September 6, 2017, it filed a civil injunctive enforcement action in the U.S. District Court for the Northern District of Illinois against three affiliated companies located in Newport Beach, California, Monex Deposit Company, Monex Credit Company, and Newport Services Corporation(collectively, Monex), and Monex’s principals Louis Carabini and Michael Carabini. The CFTC Complaint charges the Defendants, among other claims, with defrauding thousands of retail customers nationwide out of hundreds of millions of dollars, while executing thousands of illegal, off-exchange leveraged commodity transactions. CFTC

September 5, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today entered an Order requiring Dallas, Texas-based W Resources, LLC (W Resources) to pay a $150,000 civil monetary penalty for acting as a Commodity Pool Operator (CPO) without registering with the CFTC and to cease and desist from further violating the Commodity Exchange Act (CEA), as charged. The Order finds that W Resources operated W North Fund LLC, W North Fund II LLP, and W North Fund III LLP (together, W North Funds) as commodity pools by trading commodity options to hedge financial exposure to physical oil and gas assets. However, the Order finds that, beginning in or about October 2013, W Resources operated and continues to operate the W North Funds without registering with the CFTC as a CPO, in violation of the registration provisions of the CEA. CFTC

August 24, 2017

The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against Defendants Thomas Lanzana (d/b/a Unique Forex) currently of Pawleys Island, South Carolina and his company Blackbox Pulse, LLC of North Bergen, New Jersey, and Nikolay Masanko and his company White Cloud Mountain, LLC, both of St. Augustine, Florida, charging them with fraud in connection with soliciting customers for their foreign currency derivatives (forex) trading pools and other investments. The CFTC Complaint, filed on August 21, 2017, in the U.S. District Court for the District of New Jersey, also charges the Defendants with misappropriating customer funds and with registration violations. Lanzana resided at various times in Midland Park and New Bergen, New Jersey, until approximately 2015, according to the Complaint. CFTC

August 17, 2017

The Commodity Futures Trading Commission (CFTC) announced that Judge William P. Dimitrouleas of the U.S. District Court for the Southern District of Florida entered a Consent Order against Defendants Jeffrey Slemmer of Acton, Massachusetts, Christian Dorrian of Boynton Beach, Florida, Adam Roth of Boca Raton, Florida, and their former respective Florida companies Slemmer Enterprises LLC, Dorrian Enterprises, LLC, and Roth Investment Group LLC, finding that the defendants fraudulently solicited customers in connection with precious metals and diamonds transactions, misappropriated customer funds, and concealed their fraud with false account statements. The defendants executed the scheme using the business names Berkley Hard Asset Group, Berkley Hard Assets, and Berkley Rare Diamonds (the Berkley Enterprise). The Order requires the Defendants to pay, jointly and severally, $2,738,040 in restitution to defrauded customers and a $2,738,040 civil monetary penalty. The Order also imposes permanent trading and registration bans against the defendants, among other things, and prohibits them from committing further violations of the Commodity Exchange Act and CFTC Regulations, as charged. CFTC