July 11, 2013
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today filed a Notice of Intent (Notice) to revoke the registrations of Joshua Wallace and System Capital, LLC (System Capital). System Capital, based in Oregon, is a registered Commodity Trading Advisor. Wallace is an Oregon resident registered as an Associated Person of System Capital and is System Capital’s founder, sole owner, principal, and president.
The CFTC Notice alleges that Wallace and System Capital are subject to statutory disqualification from CFTC registration based on an Order for entry of default judgment, permanent injunction and ancillary equitable relief entered by the U.S. District Court for the Southern District of New York on March 14, 2013 (see CFTC Release 6539-13, March 20, 2013). The Order prohibits Wallace and System Capital from committing further fraud, among other violations as charged, and includes findings that Wallace and System Capital misrepresented to prospective and actual clients that Wallace and System Capital had a successful history of trading futures contracts and that System Capital had assets under management of at least $29 million; and that as a result of these fraudulent solicitations, they successfully solicited at least 17 clients and managed approximately $3.5 million of client funds. The Order also found that Wallace, on behalf of System Capital and himself, knowingly provided false information and documents to the National Futures Association. Among other sanctions, the Order permanently enjoined Wallace and System Capital from further violations of the anti-fraud provisions of the Commodity Exchange Act, as charged, and ordered each of them to pay a $420,000 civil monetary penalty.
In addition, the Notice alleges that Wallace and System Capital are subject to disqualification from CFTC registration based on Wallace’s conviction for criminal commodities fraud in connection with these same activities, as entered by the U.S. District Court for the Southern District of New York on November 27, 2012. On May 15, 2013, the District Court sentenced Wallace to 27 months in prison.
CFTC Division of Enforcement staff members responsible for this action are Mark A. Picard, Elizabeth C. Brennan, Philip Rix, Steven Ringer, Lenel Hickson, Jr., Stephen J. Obie, and Vincent A. McGonagle.
Last Updated: July 11, 2013