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

Also: Chariot Advisors hit for claiming algorithmic trading ability

This week’s regulatory actions: 

NORTH CAROLINA

CFTC files action to revoke registration of Prestige Capital Advisors 

The U.S. Commodity Futures Trading Commission (CFTC) filed a notice of intent  to revoke the registration of Prestige Capital Advisors, LLC  of Charlotte, NC, as a commodity trading advisor (CTA). 

The CFTC alleges that Prestige is subject to statutory disqualification from CFTC registration based on an order of default judgment and permanent injunction entered against Prestige in the U.S. District Court for the Western District of North Carolina on Jan. 25, 2013. The order finds that Prestige fraudulently solicited and accepted more than $4.7 million from multiple pool participants for investment in one or more commodity pools that traded among other things, commodities and futures contracts. The order also finds that Prestige misappropriated pool participant funds, posted false trading returns on a website called BarclayHedge (where fund managers could post unverified historical returns for prospective clients to view), sent false trading results to at least one Prestige pool participant, and issued false account statements.  As a result, Prestige was ordered to pay approximately $6.9 million in civil monetary penalties and restitution of over $4.1 million. 

FLORIDA

Federal court enters $2.2 million default judgment order against Global Precious Metals Trading Company for operating a fraudulent off-exchange precious metals scheme

The CFTC obtained a federal court default judgment order against Global Precious Metals Trading Company, LLC (GPMT) of Coral Gables, Fla., and its principal Michael Ghaemi of Miami, Fla., charged with running a fraudulent precious metals scheme and misappropriating customers’ funds. 

The order, entered by Federal District Judge Ursula Ungaro, requires GPMT and Ghaemi to pay a $1.26 million civil monetary penalty, $736,979 in restitution, and to disgorge $186,860 in ill-gotten gains.The order also imposes permanent trading and registration bans against them and prohibits them from violating the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

 The order finds that, from at least July 16, 2011 to August 2012, GPMT and Ghaemi illegally solicited and accepted approximately $800,000 from nine U.S. retail customers to purchase physical precious metals, such as gold, silver, platinum, and palladium, on a financed basis, and defrauded the customers in connection with the precious metals transactions. 

The order also finds that GPMT and Ghaemi defrauded their retail customers by claiming to sell actual physical metals, making loans to customers to purchase those physical metals, and arranging for storage of the physical precious metals, when, in fact, they did not purchase or store precious metals, even as they charged customers interest on their loans and storage fees.  

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