CFTC says manager hid accounts

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a complaint charging Blue Sky Capital Management Corp. (Blue Sky) of Lebanon, Tenn., and its principal, Gregory M. Schneider of Mount Juliet, Tenn. The CFTC alleges they made false statements to the National Futures Association (NFA), the futures industry self-regulatory organization, which operates under CFTC oversight.

The CFTC complaint, filed in the U.S. District Court for the Middle District of Tennessee, alleges that Blue Sky and Schneider willfully concealed material facts from and/or made false, fictitious, or fraudulent statements or representations to the NFA in connection with an NFA audit of Blue Sky conducted on or about October 21-23, 2008. At the time, Blue Sky was registered with the CFTC as a Commodity Pool Operator and a Commodity Trading Advisor, and Schneider was registered as Blue Sky’s sole Associated Person.

Specifically, the complaint alleges that the defendants falsely represented that Blue Sky had only managed 10 customer accounts with an aggregate equity of approximately $20,000, that Blue Sky had managed customer accounts only since March 2008, and that Blue Sky had received no customer complaints. However, according to the complaint, the defendants failed to disclose that Blue Sky had managed approximately 80 other customer accounts in 2007 with an aggregate equity of approximately $1.2 million, which had net losses of approximately 30 percent of invested equity. Defendants also allegedly failed to disclose that a customer had complained to defendants repeatedly about his Blue Sky account prior to, and even during, the NFA audit. When confronted by the NFA in January 2009, the defendants allegedly made additional false, fictitious, or fraudulent statements regarding their failure to disclose the 2007 accounts and the customer complaint.

In its continuing litigation against the defendants, the CFTC seeks permanent trading and registration bans, a civil monetary penalty, and permanent injunctions against further violations of federal commodities law.

The CFTC appreciates the assistance provided by the NFA. In November 2009, the NFA permanently barred Blue Sky and Schneider from NFA membership.

CFTC Division of Enforcement staff responsible for this action are Stephanie Reinhart, Joseph Konizeski, Judith McCorkle, Scott Williamson, Rosemary Hollinger, and Richard Wagner.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome