CFTC Charges Corporation for Failing to Register as a CPO

The CFTC charged a Tennessee corporation and its owner for failing to register as a commodity pool operator ("CPO") and an associated person ("AP") in connection with accepting and receiving funds to trade in commodity futures.

In a Complaint filed with the United States District Court for the Western District of Tennessee, the CFTC alleged that the defendants misrepresented to customers that the company operated as a successful commodity pool. The CFTC alleged that the company solicited and received $2 million from approximately 50 pool participants to trade futures contracts. Additionally, the CFTC claimed that the defendants commingled pool funds with other non-pool assets and directed pool participants to send money to the owner's personal account, where the owner placed trades in his own name. The CFTC claimed that the defendants issued false account documents to pool participants, including creating false account statements to legitimize fund solvency and trade confirmations to explain the loss of pool participants' funds. The CFTC further alleged that the defendants failed to register with the CFTC as required.

The CFTC requested that the Court issue an Order finding: (i) disgorgement of ill-gotten gains, (ii) civil monetary penalties, (iii) restitution, (iv) trading and registration bans and (v) a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations.