Regulator files civil enforcement action over alleged trading scheme

U.S. derivatives regulators are taking action against the perpetrators of an alleged US$75-million foreign currency trading scheme they say defrauded hundreds of retail investors.

The U.S. Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action in federal court against several Florida-based firms — Oasis International Group, Ltd., Oasis Management, LLC and Satellite Holdings Co. — along with five individuals, alleging that they operated a forex trading scheme that raised approximately US$75 million from investors, most of which was lost.

Among other things, the CFTC alleges the defendants made false promises to investors, provided investors with phony account statements and lost or misappropriated most of their money.

Overall, the regulator says that about $28 million was used for payments to other investors to sustain the scheme, US$21 million was lost in forex trading and US$18 million was diverted for personal expenses, such as vacations and college tuition.

The allegations have not been proven. The CFTC is seeking disgorgement of ill-gotten gains, civil penalties, restitution and permanent bans against the defendants in the case.

U.S. district court judge Virginia Covington granted a restraining order, freezing the defendants’ assets and providing the CFTC with access to their records. The court also appointed a temporary receiver to take control of the corporate defendants’ and the individual defendants’ assets.

“This action is among the latest examples of the CFTC’s coordination with other regulators and criminal authorities to aggressively and assertively root out fraud and bad actors involved in our markets. We will continue to hold accountable not just companies, but also individual wrongdoers,” James McDonald, director of enforcement with the CFTC, said in a statement.

Staff

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