CFTC Obtains Federal Court Order against Some Guy for Engaging in Unauthorized Futures Trading (with Lofchie Comment)

The CFTC announced that Judge Leonard D. Wexler of the U.S. District Court for the Eastern District of New York entered a default judgment and permanent injunction order against defendant Nicholas Cosmo for defrauding investors of tens of millions of dollars in a commodity futures trading scheme. The court's order finds that Cosmo engaged in a fraudulent scheme in which tens of millions of dollars were solicited from investors to invest in bridge loans and merchant advances. Instead, Cosmo used investors' funds, in part, to engage in unauthorized commodity futures trading that resulted in tens of millions of dollars in trading losses, according to the order. The order also finds that Cosmo's futures trading and trading losses were never disclosed to investors.

Lofchie Comment: The somewhat interesting thing about this case, which is otherwise a large but straightforward fraud, is that it actually has almost nothing to do with futures trading. The guy lied to investors about what he was doing with their money and, instead of doing what he promised, traded in futures (and blew it all). But the real crime was the lie to the investors; as far as that is concerned, it made no difference whether he traded in futures, bet on the horses or had big parties.

View Order in full here (links externally to CFTC website).