September 24, 2013
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Newbridge Metals, LLC, based in Boca Raton, Florida, for engaging in illegal off-exchange precious metals transactions.
The CFTC Order requires Newbridge to pay restitution of $1,517,930.66 to its customers. In addition, the Order imposes permanent registration and trading bans against Newbridge and requires the firm to cease and desist from violating Section 4(a) of the Commodity Exchange Act, as charged.
As explained in the Order, financed transactions in commodities with retail customers, like those engaged in by Newbridge, must be executed on, or subject to, the rules of an exchange approved by the CFTC. The CFTC Order finds that, from February 2012 through February 2013, Newbridge solicited retail customers to buy and sell precious metals on a financed basis.
According to the Order, Newbridge telemarketers typically represented that a customer could purchase a desired quantity of precious metals with a 25% deposit, and that the customer could borrow the remaining 75%. The customer would then pay Newbridge a finance charge on the loan, a service charge, and a maximum commission of 15%.
If a customer agreed to the transaction, the customer sent the deposit, finance charge, and commission to Newbridge. Newbridge confirmed the transaction and ultimately transferred the funds to Hunter Wise Commodities, LLC (Hunter Wise), the Order finds. Hunter Wise subsequently remitted to Newbridge a portion of the customer commissions and fees, with Newbridge ultimately receiving $1,517,930.66 in commissions and fees for the retail financed precious metals transactions executed through Hunter Wise, the Order states.
However, according to the Order, neither Newbridge nor Hunter Wise bought, sold, loaned, stored, or transferred any physical metals for these transactions, and neither company actually delivered any precious metals to any customer. Because Newbridge’s transactions were executed off exchange, they were illegal.
The CFTC sued Newbridge’s clearing firm, Hunter Wise, in federal court in Florida on December 5, 2012. The CFTC charged Hunter Wise with engaging in illegal, off-exchange precious metals transactions, as well as fraud and other violations (see CFTC Press Release 6447-12). On February 25, 2013, the court granted a preliminary injunction against Hunter Wise, froze the firm’s assets, and appointed a corporate monitor to assume control over those assets (see CFTC Press Release 6522-13).
The CFTC Division of Enforcement staff members responsible for this case are Ken Koh, Todd Kelly, John Einstman, and Paul G. Hayeck.
Last Updated: September 24, 2013