August 30, 2010
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of fraud charges against Terrence R. Pipenhagen of Orlando, Fla. and his companies, TRP Advisory Group, Inc. (TRP) and Traders East, Inc. (TEI), for issuing false statements to customers to conceal commodity futures trading losses. Pipenhagen has never been registered with the CFTC.
The CFTC order requires Pipenhagen, TRP and TEI jointly and severally to pay a $150,000 civil monetary penalty, permanently prohibits them from trading on registered entities on behalf of themselves and others and requires them never to seek registration with the CFTC.
The order finds that, from mid-2002 through August 2006, Pipenhagen and TRP operated a commodity futures pool and also managed individual commodity futures accounts. Pipenhagen, through his companies, defrauded customers by sending them false account statements to conceal trading losses and to prevent customers from withdrawing their investments. Pipenhagen solicited at least $450,000 from at least nine individuals he knew from working as an insurance and securities salesman, the order further finds.
Pipenhagen claimed he could provide customers with consistent gains and achieve high returns. However, he consistently sustained trading losses and ultimately lost all the customers’ funds, the order finds. For example, Pipenhagen sent an account statement showing profits of more than $10,000, even though the trading account had been closed months earlier after sustaining more than $75,000 in losses, the order finds. Eventually, Pipenhagen’s customers attempted to access their funds and discovered his fraud.
TRP and Pipenhagen further violated federal commodities law by failing to register with the CFTC as a Commodity Pool Operator and Associated Person, respectively, and failing to comply with CFTC regulatory requirements related to operating commodity pools, the order finds.
CFTC Division of Enforcement staff members responsible for this case are Timothy M. Kirby, Kevin K. Batteh, Gretchen L. Lowe and Phyllis J. Cela.
Last Updated: August 30, 2010