September 27, 2016
Washington, DC – The U.S. Commodity Futures Trading Commission today announced the filing of a civil enforcement action in the U.S. District Court for the Southern District of New York, charging Kevin Michael Symons of Foothill Ranch, California, his wholly-owned company, FTS Financial, Inc. (FTS) of Irvine, California, and Jerry Austin Simmons of Charlotte, North Carolina with the fraudulent promotion of Simmons’ “Real Time Trade Room” (the Room), an online futures “trading” forum marketed by Defendants as a way to observe Simmons as he purported to trade futures contracts “live.” Additionally, the CFTC’s Complaint charges Simmons with soliciting clients to open managed futures trading accounts without being registered with the CFTC as an Associated Person (AP) of a Commodity Trading Advisor (CTA).
The Complaint alleges that the Defendants made false and misleading statements concerning Simmons’ experience and success trading futures contracts, Simmons’ “live” trading in the Room, and Simmons’ past profitability trading futures contracts in the Room.
For example, the Complaint alleges that FTS’s website stated that Simmons traded “live in real time” in the Room. According to the Complaint, Simmons similarly stated in email and promotional materials that he, Simmons, engaged in “live market trading” and “live trades” in the Room. Promotional material created by Simmons stated that “you’ll actually see him physically enter the trade order . . . you’ll see that order get filled and then you’ll see the order either go on to be a winner or to be a loser.” According to the CFTC’s Complaint, these statements were false because Simmons never actually traded futures contracts in the Room. Rather, he only engaged in hypothetical or simulated trading in the Room.
The Complaint also alleges that the Defendants touted Simmons as a very successful professional trader. The Complaint alleges that Simmons created a false and misleading track record of his supposed trading profits in the Room and that the track record was used by FTS to solicit clients. The Complaint alleges that Simmons only engaged in hypothetical or simulated trading in the Room and therefore never earned any trading profit in the Room, and what little futures trading Simmons has actually done (trading in a personal trading account for a short time in the 1970s) was not profitable and thus Simmons was not a successful professional trader.
The Complaint also alleges that FTS placed hypothetical and simulated performance information on its website without including a required disclosure stating the inherent limitations of such hypothetical information. The Complaint also charges Simmons with aiding and abetting FTS and Symons’ fraud and charges Symons for FTS’s violations as a controlling person of FTS who knowingly induced the violations or failed to act in good faith.
The Complaint further alleges that Simmons solicited clients to participate in the “Broker Assist Program” (BAP). Simmons described the BAP to clients as a way for Simmons to “direct” the trading in clients’ futures trading accounts. According to the Complaint, Simmons solicited clients to open managed futures trading accounts without being registered with the CFTC as an AP of a CTA.
FTS Took in More than $2.5 Million in the Fraud
According to the Complaint, FTS made between 700 and 1,000 cold calls daily to solicit prospective clients around the United States to purchase access to the Room, charging clients a one-time fee ranging from $4,995 to $7,500 for six months of access to the Room. FTS, by and through its employees and agents including Symons, took in more than $2.5 million in connection with FTS’s fraudulent promotion of the Room, as alleged.
The Complaint seeks restitution, disgorgement, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations, as charged.
CFTC Division of Enforcement staff members responsible for this action are R. Stephen Painter, Jr., David W. MacGregor, Lenel Hickson, Jr., and Manal M. Sultan.
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CFTC’s Fraud Advisories, Including Commodity Trading Systems Sold on the Internet
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including an Advisory on Commodity Trading Systems Sold on the Internet. The CFTC has seen an increase in websites that fraudulently promote commodity trading systems and advisory services, and the information in this Advisory is designed to help customers identify this potential swindle.
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: September 27, 2016