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RELEASE: pr5349-07

  • Release: 5349-07

    For Release: June 28, 2007

    Lake Shore Asset Management Limited, a Registered Commodity Pool Operator and Commodity Trading Advisor, Charged with Refusing to Make Its Books and Records Available to CFTC for Inspection

    Court Enters Ex Parte Statutory Restraining Order Freezing Lake Shore’s Assets and Prohibiting the Firm from Refusing to Permit CFTC Representatives to Inspect Its Records

    Washington, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today that on June 26, 2007, the Honorable Blanche M. Manning of the United States District Court for the Northern District of Illinois, acting on a CFTC complaint filed on June 26, 2007, issued an ex parte statutory restraining order freezing the assets of defendant Lake Shore Asset Management Limited (LAM), prohibiting LAM from destroying, altering or disposing of its books, records and documents, and prohibiting LAM from refusing to permit authorized representatives of the CFTC to inspect its books and records. CFTC v. Lake Shore Asset Management Limited, No. 07 C 3598 (N.D. Ill.).

    “The Commission’s ability to inspect books and records is a critical regulatory tool that allows us access to a registrant’s daily operations. When a CPO or CTA denies us that right of access, we must act swiftly to protect investors and important documents,” said Gregory Mocek, the CFTC’s Director of Enforcement.

    LAM, a purported Bermuda corporation with a Chicago office, is registered as a Commodity Pool Operator (CPO) and Commodity Trading Advisor (CTA).  National Futures Association (NFA) records list Laurence Rosenberg, a former Chairman of the Chicago Mercantile Exchange, as LAM’s Director. The complaint alleges that Rosenberg told the NFA that none of LAM’s business is conducted in Bermuda and that all telephone calls to the Bermuda office are forwarded to an office in Toronto, Canada, where all trading is done and all books and records are maintained. Nevertheless, the address for the Toronto office provided by LAM in NFA registration materials is actually a mail drop, not a business address.

    The complaint further alleges that on June 14, 2007, Rosenberg represented that LAM managed approximately 250 accounts and operated several commodity pools, and the total assets of the pools and managed accounts were approximately $1 billion. However, a day later, Rosenberg provided the NFA with access to LAM’s protected web pages and the NFA learned that assets for all commodity pools and managed accounts totaled $466,710,761, dramatically less than Rosenberg’s estimate of $1 billion.

    The CFTC complaint alleges that, from June 21, 2007 through the present, LAM has violated the Commodity Exchange Act (Act) and CFTC regulations, by refusing to make its books and records available for inspection and by being unable or unwilling to provide required information about its pool participants and trading performance.

    The complaint also alleges that, between June 14, 2007 and the present, LAM’s principals, including Rosenberg, made several inconsistent statements concerning assets in the pools and managed accounts, LAM’s ownership, U.S. investors in the pools, and the location of its books and records.

    Status Hearing Scheduled for July 11, 2007

    In the continuing litigation, the CFTC is seeking preliminary and permanent injunctive orders, civil monetary penalties and other appropriate equitable relief.  The court set the matter for a status hearing on July 11, 2007, and ordered that the statutory restraining order shall remain in full force and effect until that date.

    The following CFTC Division of Enforcement staff are responsible for this case: Diane M. Romaniuk, Ava M. Gould, Mary E. Spear, Don Nash, Scott R. Williamson, Rosemary Hollinger and Richard B. Wagner.  The CFTC also appreciates the assistance it has received from the National Futures Association (NFA).

    Media Contacts
    Ianthe Zabel
    202-418-5080

    Dennis Holden
    202-418-5088

    Last Updated: July 2, 2007

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