U.S. District Court Grants CFTC Motion of Final Default Judgment against Florida Companies

U.S. District Court of the Southern District of Florida Judge Beth Bloom granted a CFTC Motion for Entry of a Final Default Judgment against three companies and their owner for (i) engaging in illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined or financed basis without making delivery, and (ii) failing to register with the CFTC as futures commission merchants ("FCMs") pursuant to CEA requirements.

Under Dodd-Frank, off-exchange leveraged, margined or financed transactions, such as those conducted by the defendants, are illegal unless they result in the actual delivery of metal within 28 days. According to the order, precious metals were never actually delivered to the defendants' customers.

The Order requires the defendants to pay a disgorgement totaling $612,892 and a civil monetary penalty totaling $1,838,676. The Order also imposes permanent trading, solicitation and registration bans against the defendants and prohibits them from violating provisions of the CEA, as charged.