January 15, 2014
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court Order requiring Defendant Mark E. Rice, of Sugar Land, Texas, to pay $827,000 in restitution and a $673,000 civil monetary penalty to settle CFTC charges related to fraudulent solicitation and misappropriation of customer funds to trade leveraged off-exchange foreign currency contracts (forex). The Consent Order of Permanent Injunction, entered on January 13, 2014, by Judge Lee H. Rosenthal of the U.S. District Court for the Southern District of Texas, also imposes permanent trading and registration bans against Rice and prohibits him from violating provisions of the Commodity Exchange Act, as charged.
The Consent Order stems from a CFTC Complaint filed on June 29, 2011, against Rice and Rice’s company, Financial Robotics, Inc. (see CFTC Press Release 6067-11).
The Order finds that, from June 2008, Rice operated a fraudulent scheme that solicited approximately $1.7 million from one individual to trade leveraged off-exchange forex contracts. According to the Order, Rice falsely told his customer, among other things, that his investment was “risk free” and insured against loss and that the return of his principal was guaranteed. The Order further finds that Rice misappropriated at least $576,000 of his customer’s funds by transferring the money to unrelated Rice-controlled companies and, thereafter, spending at least $404,000 of those funds for Rice’s personal and business expenses.
The CFTC’s litigation continues against Financial Robotics, Inc.
The CFTC thanks the National Futures Association, the British Virgin Islands Financial Services Commission, The Netherlands Authority for the Financial Markets, and the United Kingdom’s Financial Conduct Authority for their assistance.
CFTC Division of Enforcement staff members responsible for this case are Kevin S. Webb, Michelle S. Bougas, James H. Holl, III, and Gretchen L. Lowe.
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CFTC Fraud Awareness Advisories & Prevention Information
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including Foreign Currency Trading (Forex) Fraud. The CFTC Forex Fraud Advisory states that the CFTC has witnessed a sharp rise in Forex trading scams in recent years and this Advisory helps customers identify potential fraud. The Advisory states that the Forex market is volatile and carries substantial risks. The Forex market is not the place to put any money that you cannot afford to lose, such as retirement funds, as you can lose most or all it very quickly. Customers can also report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or an online form.
Last Updated: January 15, 2014