For Release: September 27, 2007
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that the Honorable Patricia A. Seitz of the United States District Court for the Southern District of Florida entered consent orders of permanent injunction against Miami area residents Eduardo Barale, Malini Nersian, and Michael Mesa, former employees of Miami-based Brickell Key Financial, LLC (Brickell), settling charges that they fraudulently solicited customers to purchase commodity futures contracts and options on commodity futures contracts.
The orders stem from a CFTC complaint filed in October 2004, which alleged that, between at least June 2002 and April 2003, several Brickell employees fraudulently solicited customers to open accounts and trade commodity futures contracts and options. CFTC v. Brickell Key Financial, LLC, et al, Civil Action No. 04-22549 (S.D.Fla., filed October 8, 2004).
The orders found that Brickell sales persons made false and misleading sales solicitations by, among other things, misrepresenting the profit potential of Brickell’s commodity futures and options trading recommendations. For example, Brickell’s senior associated persons represented that significant profits could be made by trading crude oil futures because of the forthcoming Iraqi war and that investments could be doubled during the winter by investing in heating oil, crude oil, and unleaded gas options.
Brickell’s sales persons had no reasonable basis for making these profit claims because such representations exaggerated the magnitude and likelihood of potential profit since widely-reported geopolitical crisis and seasonal demands are factored into the prices of futures and options on futures.
The court’s order against Mesa and Nersian found that they engaged in fraudulent sales solicitations while acting as associated persons of Brickell. The order as to Mesa, entered on September 18, 2007, requires Mesa to make $25,000 in restitution to Brickell’s customers and imposes a civil monetary penalty of $120,000. It also permanently prohibits Mesa from applying for registration with the CFTC and from soliciting funds, controlling or directing the trading of commodity interest accounts, or engaging in any commodity-related activity. The order as to Nersian, entered on July 27, 2007, imposes a civil monetary penalty of $10,000 and permanently prohibits Nersian from engaging, directly or indirectly, in any commodity-related activity.
Earlier, on July 27, 2007, the court also issued a consent order against Brickell’s founder and CEO, Eduardo Barale, that finds Barale liable for Brickell’s violations as a controlling person of Brickell. The order also finds Barale liable for failing to create a compliance program to detect and prevent Brickell employees from making misleading and fraudulent statements. In fact, the order states, Brickell did not have a compliance manual or any other written procedures for associated persons to follow with respect to customer solicitation and handling of customer complaints.
The order requires Barale to pay $70,000 in restitution to Brickell’s customers and imposes a civil monetary penalty of $120,000, while also prohibiting Barale from applying for CFTC registration, entering into futures or options transactions for himself or others for a period of five years and until such time as he pays the restitution and the civil monetary penalty.
The following CFTC Division of Enforcement staff members are responsible for this case: Mark Bretscher, William Janulis, Michael Tallarico, Scott Williamson, Rosemary Hollinger, Richard Wagner, and Cynthia Cannon.
Last Updated: September 26, 2007