The Blotter: Falcone, Harbinger settle with SEC for $18 million

Also: Chariot Advisors hit for claiming algorithmic trading ability

The order further finds that GPMT and Ghaemi misappropriated virtually all of their customers’ funds and lost virtually all of those funds to either personal or other unauthorized use of the funds or through speculative margin trading in an account at a London brokerage.  As a result, customers were left with no precious metals and with only a fraction of their funds having been returned to them. 

NEW YORK

CFTC seeks to revoke registration of Chicago Trading Managers 

The CFTC filed a notice of intent to revoke the registration of Chicago Trading Managers LLC (CT Managers).  CT Managers is currently registered with the CFTC as a commodity pool operator and commodity trading advisor.

The CFTC alleges that CT Managers is subject to statutory disqualification from CFTC registration based on a default judgment and permanent injunction order entered by the U.S. District Court for the Southern District of New York on May 15, 2013. That injunction prohibits CT Managers from committing further fraud.  Additionally, the default judgment includes findings that CT Managers defrauded pool participants who had invested more than $9 million by knowingly issuing or causing to be issued false account statements for the commodity pools.  

In the default judgment order, CT Managers was held liable for fraud and ordered to pay a civil monetary penalty of $1.4 million, jointly and severally with another defendant. 

COLORADO

CFTC seeks to revoke registrations of Veruus Wealth Management 

The CFTC filed a notice of intent to revoke the registrations of Veruus Wealth Management, LLC, a registered commodity pool operator and commodity trading advisor.  

The CFTC alleges that Veruus is subject to a statutory disqualification from CFTC registration based on an order of default judgment entered by the District Court for the City and County of Denver, Co. on Nov. 28, 2012.  In that private litigation, the plaintiffs alleged that the defendants solicited them to invest in a Veruus-managed foreign exchange trading account and that they were the victim of civil theft and conversion.  The judgment order entered by the Court found Veruus liable for civil theft and conversion of $339,517.79 in customer funds. 

NORTH CAROLINA

SEC charges Chariot Advisors for misleading fund board on algorithmic trading ability

The Securities and Exchange Commission (SEC) announced charges against a North Carolina-based investment adviser and its former owner for misleading an investment fund’s board of directors about the firm’s ability to conduct algorithmic currency trading so they would approve the firm’s contract to manage the fund.

The SEC alleges that Chariot Advisors LLC and Elliott L. Shifman misled the fund’s board about the nature, extent, and quality of services that the firm could provide as he touted the competitive benefits of algorithmic trading in two presentations before the board. Contrary to what Shifman told the directors, Chariot Advisors did not devise or otherwise possess any algorithms capable of engaging in the currency trading that Shifman was describing.  After the fund was launched, Chariot Advisors did not use an algorithm model to perform the fund’s currency trading as represented to the board, but instead hired an individual trader who was allowed to use discretion on trade selection and execution.  The misconduct by Shifman and Chariot Advisors caused misrepresentations and omissions in the Chariot fund’s registration statement and prospectus filed with the SEC and viewed by investors.

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