May 16, 2013
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Lewis A. Kaplan of the U.S. District Court for the Southern District of New York entered a consent judgment and permanent injunction Order against Defendants Spencer Montgomery and Brian Reynolds, and a default judgment and permanent injunction Order against Defendants Arjent Capital Markets LLC (Arjent) and Chicago Trading Managers LLC (CT Managers), for defrauding pool participants by knowingly issuing or causing to be issued false account statements for commodity pools. The Orders require Montgomery and Reynolds each to pay a $140,000 civil monetary penalty, Arjent and CT Managers jointly to pay a $1.4 million civil monetary penalty, and Arjent to pay an additional $140,000 civil monetary penalty. The Orders further impose permanent trading and registration bans on all the Defendants and prohibit them from violating the Commodity Exchange Act (CEA), as charged.
The court’s Orders, entered March 19, 2013 and May 15, 2013, respectively, stem from a CFTC Complaint filed on March 13, 2012, that charged the Defendants with violating the CEA’s anti-fraud provisions (see CFTC Press Release 6207-12).
The Orders find that from at least June 2008 through at least November 2009, Arjent, CT Managers, Montgomery, and Reynolds defrauded commodity pool investors, who had invested approximately $10.5 million. CT Managers, Montgomery, and Reynolds knowingly issued and/or causing to be issued false account statements for two commodity pools, which Arjent aided and abetted, while Arjent, Montgomery, and Reynolds knowingly issued or caused to be issued a false account statement for a third commodity pool, the Orders find. Additionally, the Orders find that the Defendants knew that certain debits were being held in the same account as the commodity pools’ assets and that those debits depleted the commodity pools’ assets. Nonetheless, the Orders find that Arjent, CT Managers, Montgomery, and Reynolds issued or caused to be issued account statements that did not reflect the dilution of the commodity pools’ assets by these debits.
The CFTC thanks the National Futures Association, the Chicago Board Options Exchange, the U.S. Securities and Exchange Commission, and the Financial Services Authority (UK) for their assistance.
CFTC staff members responsible for this case are Laura Martin, Janine Gargiulo, Candice Aloisi, Michael Geiser, Judith Slowly, David Acevedo, Manal Sultan, Lenel Hickson, Lisa Hazel, Annette Vitale, Ronald Carletta, Stephen Obie, and Vincent McGonagle.
Last Updated: May 16, 2013