In related actions, the U.S. Department of Justice entered into a deferred prosecution agreement with Rabobank, deferring criminal wire fraud charges in exchange for Rabobank continuing to cooperate and agreeing to a penalty of $325 million; the United Kingdom Financial Conduct Authority issued a Final Notice regarding its enforcement action against Rabobank and imposed a penalty of £105 million (approximately $170 million); the Japanese Financial Services Agency issued an administrative action against Rabobank for failure of its internal controls within its Tokyo office; De Nederlandsche Bank (or the Dutch National Bank took action by imposing remedial measures on Rabobank; and the Dutch Public Prosecutor’s Office agreed to a payment of €70 million (approximately $96.5 million) by Rabobank for the bank to avoid a criminal prosecution.
The CFTC has now imposed penalties of $1.765 billion on entities for manipulative conduct with respect to LIBOR and other benchmark interest rates. ICAP Europe Limited, ($65 Million penalty), The Royal Bank of Scotland plc and RBS Securities Japan Limited, ($325 Million penalty), UBS AG and UBS Securities Japan Co., Ltd., ($700 Million penalty), Barclays PLC, Barclays Bank PLC, and Barclays Capital Inc., ($200 million penalty).
NFA issues MRA against AlphaMetrix LLC
The National Futures Association (NFA) ordered AlphaMetrix LLC to satisfy its obligations to certain pool participants by Nov. 1. The firm had deducted advisory fees for certain participants in commodity pools operated by the firm. Those fees were to be reinvested in the pools but were not. The total amount owed to participants is approximately $600,000. AlphaMetrix has approximately $700 million under management. According to NFA's action, if AlphaMetrix fails to satisfy its obligations by Nov. 1, the firm would be prohibited from placing trades for any of its pools except for trades liquidating open positions. Further, any disbursement of pool funds could only be made with NFA's approval.
Jeffrey Gustaveson ordered to pay over $1.6 million for commodity pool scheme
The CFTC obtained a federal court order awarding restitution for defrauded commodity customers and a civil monetary penalty against defendant Jeffrey Gustaveson of Morgan Hill, Cal., in connection with a commodity pool investment scheme. Gustaveson is to pay a civil monetary penalty of $1,230,000 and $410,000 in restitution.It also imposes permanent trading and registration bans against Gustaveson and prohibits him from violating the Commodity Exchange Act (CEA), as charged.
The order finds that Gustaveson received $2,495,000 from customers to trade commodity futures in a pool. But, rather than trade the pool participants’ funds as promised, Gustaveson used only approximately $400,000 of the funds to trade commodity futures, and he kept at least $400,000 of the remaining funds to pay his personal expenses. To conceal his misappropriation, Gustaveson distributed false trading account statements to the pool participants that misrepresented the value of the pool, reported false profits, and failed to disclose his misappropriation of pool participants’ funds. When his fraud was exposed, Gustaveson returned a significant portion of the pool participants’ funds, leaving $410,000 of the customers’ funds unpaid, the order finds. As to the amount still owed, Gustaveson admitted that he spent the money on personal expenses, past-due taxes, and repaying a previous investor.
Louis J. Giddens, Jr., Anthony W. Dutton, and Michael Gomez to pay $400,000 for foreign exchange scheme
The CFTC obtained a consent order from the U.S. District Court for the Northern District of Georgia against Defendants Louis J. Giddens, Jr. of Fayetteville, Ga., Anthony W. Dutton of Peachtree City, Ga., and Michael Gomez of Valrico, Fla., requiring them to pay restitution to investors, respectively, of $29,759.49, $56,604.35, and $68,000 and to pay a civil monetary penalty of $100,000, $100,000, and $75,000, respectively. The court’s order also imposes permanent trading and registration bans against them, and prohibits them from violating the anti-fraud provisions of the Commodity Exchange Act, as charged.
The order finds that, from at least January to October 2010, Giddens and Dutton operated Currency Management Group, LLC and Pinnacle Capital Partners, LLC, respectively, and solicited and accepted funds to trade off-exchange foreign currency from friends and co-workers. Giddens and Dutton transferred the solicited funds to another entity they owned and operated named Pinnacle Trade Group, LLC to trade forex. Funds transferred to Pinnacle Trade were either sent to forex trading accounts or to a bank account controlled by Gomez to trade investor funds. However, the order finds that not all of investor money was traded in forex, but rather, some funds were retained by Gomez and Dutton.
The order also finds that Giddens and Dutton made statements on websites guaranteeing monthly returns of either 5% or 10% from trading forex and that the websites did not disclose any risks associated with trading forex or that past performance does not guarantee future results. In addition to promising to pay investors fixed returns, the order finds that Giddens and Dutton executed promissory notes that promised to repay investors their principal sum, plus monthly interest of either five or ten percent and prepared online account statements that showed the current net balance of the promissory notes. The notes did not disclose any risk associated with forex trading, the order finds.
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