For Release: May 7, 2007
Washington, D.C. — The Commodity Futures Trading Commission (CFTC) announced today that on April 24, 2007, the Honorable Joan A. Lenard of the United States District Court for the Southern District of Florida issued a consent order of permanent injunction against Liberty Financial Trading Corp., Inc. (LFTC), Liberty Real Assets Investment Corporation (LRAIC), and Ted Romeo, all of Pompano Beach, Florida. The consent order establishes restitution and civil monetary penalties totaling $16,403,000.
The consent order stems from a complaint filed by the CFTC on September 21, 2004, alleging that LFTC, its successor corporation, LRAIC, and Romeo, among other brokers, misrepresented facts and omitted material information when soliciting customers to trade commodity options in violation of the Commodity Exchange Act and CFTC regulations. (See CFTC News Release 5032-04, December 27, 2004.)
The consent order finds that, from at least early 2002, LFTC, LRAIC, and Romeo: 1) misrepresented the likelihood of profits from trading commodity options, 2) failed to disclose adequately the risk of loss inherent in trading commodity options, and 3) failed to disclose, in light of the profit representations they were making, the fact of LFTC’s and LRAIC’s dismal performance record trading commodity options for their customers. From 2002 through 2004, 96 percent of LFTC’s and LRAIC’s customers lost money, totaling approximately $10 million. During the same time period, however, LFTC and LRAIC generated approximately $6 million in commissions and fees.
The consent order, among other things, requires LFTC and LRAIC to pay $9.783 million in restitution to its customers. Of this amount, Romeo is jointly and severally liable for $300,000. Additionally, the consent order assesses civil monetary penalties of $6 million against LFTC, $500,000 against LRAIC, and $120,000 against Romeo. In addition, the order permanently enjoins LFTC, LRAIC, and Romeo from engaging in any commodity-related activity, including soliciting funds or engaging in trading in any market regulated by the CFTC.
The following CFTC Division of Enforcement staff members were responsible for this case: Alan Edelman, James Holl III, Lacey Dingman, Gretchen Lowe, and Vincent McGonagle.
Last Updated: May 8, 2007