June 11, 2014
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Sidney H. Stein of the U.S. District Court for the Southern District of New York (Manhattan) entered an Order of default judgment and permanent injunction against CFTC Defendants Michael James Seward, Yan Kaziyev, and their company SK Madison Commodities, LLC (SKMC), a Commodity Pool Operator based in New York City. The Order requires the Defendants to pay restitution totaling $1,036,981.01 and a civil monetary penalty of $2,486,865.57. The Order also imposes permanent trading and registration bans against the Defendants and orders that assets controlled by SK Madison, LLC, a successor company named as a Relief Defendant in the action, be released and applied toward payment of Defendants’ restitution obligation.
The court’s Order, entered on June 9, 2014, stems from a CFTC Complaint filed on March 24, 2014 (see CFTC Press Release 6892-14) alleging that Seward and Kaziyev, by and through SKMC, fraudulently solicited more than $1.3 million from members of the public to trade futures in a commodity pool by, among other things, misrepresenting their trading practices and historical trading returns. The Complaint further alleged that the Defendants prepared and distributed to pool participants false account statements and performance reports showing huge profits while at the same time, Defendants were losing money trading futures and diverting large amounts of pool participants’ funds for Defendants’ own use. In addition to fraud, the Complaint charged Defendants with certain registration violations. As a result of the filing of this action, more than $500,000 of pool participant funds controlled by the Defendants and the Relief Defendant were frozen.
The CFTC Division of Enforcement staff members responsible for this case are Daniel Jordan, Michael Loconte, Matthew Elkan, and Rick Glaser.
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CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud that involves individuals and firms, often unregistered, offering investments in commodity pools.
Customers can 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 file a tip or complaint online.
Last Updated: June 11, 2014