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No. 01-99 January 8, 1999 |
Weekly Advisory
Commodity Futures Trading Commission Three Lafayette Centre
1155 21st Street, NW Washington, DC 20581 Telephone: (202) 418-5080
Facsimile: (202) 418-5525 |
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On January 7, 1998, the Commission held
a closed meeting to discuss enforcement matters.
On January 8, 1999, the Commission will
hold a closed meeting to discuss surveillance matters.
On January 11, 1999, the Commission will
hold a closed meeting to discuss adjudicatory matters.
NEW YORK COURT ORDERS DEFENDANTS TO PAY OVER $7.1 MILLION IN
CIVIL PENALTIES, AND ORDERS RESTITUTION IN EXCESS OF $2.3 MILLION TO
CUSTOMERS IN CFTC ACTION INVOLVING ILLEGAL FOREIGN CURRENCY FUTURES
FRAUD
CFTC Charged World Wide Currencies, Inc., United Currencies,
Corp., and A+ Currencies Int'l, Inc. in 1996 with Fraud in the Offer
and Sale of Illegal Currency Futures Contracts
WASHINGTON -- The Commodity Futures Trading Commission
(CFTC) announced today that the Honorable Whitman Knapp of U.S. District
Court for the Southern District of New York entered a final judgment and
order against World Wide Currencies, Inc. a/k/a
Worldwide Currencies, Inc., a/k/a Worldwide Currencies Ltd.;
United Currencies, Corp. a/k/a United Currencies, Inc.; and
A+ Currencies Int'l Inc. d/b/a International
Currencies, Inc. The judgment orders the defendants jointly and severally
to make restitution to customers in the amount of $2,380,797.85 and to
pay a civil monetary penalty in the amount of $7,142,393.55.
The judgment also permanently enjoins the defendants from violating
provisions of the Commodity Exchange Act (CEA) and CFTC regulations and
rescinds all contracts entered into by the defendants with their
customers.
The judgment, entered on December 23, 1998, is the culmination of
proceedings that began on October 16, 1996, when the CFTC filed a
four-count injunctive complaint against the defendants (see CFTC News
Release #3959-96, October 17, 1996). In its anti-fraud action, the CFTC
alleged that the defendants violated the CEA and CFTC regulations by
offering and selling illegal currency futures contracts, cheating and
defrauding customers in connection with the offer and sale of such
contracts, violating the CFTC's registration requirements, and
misappropriating customer funds. Shortly after the complaint was filed,
the court entered an ex parte order, and subsequently a
preliminary injunction, which, among other things, froze the
defendants' assets.
No updates were issued during this period.
On January 6, 1999, the Commission approved the National
Futures Association's proposed new registration rule 303 and proposed
amendments to registration rules 201, 301 and 302.
On January 6, 1999, the Commission authorized for
publication in the Federal Register a release announcing
amendments to the Commission's rules governing the granting of a
temporary license by the National Futures Association.
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The Commodity Futures Trading Commission granted the petition of the
Coffee, Sugar & Cocoa Exchange, Inc., for exemption from the
prohibition against dual trading in its Cocoa futures contract.
Effective Date: December 23, 1998. Vol. 63, No. 250,
12/30/98, p. 71896.
The Commodity Futures Trading Commission has adopted new regulation 1.69
that requires self-regulatory organizations to adopt rules prohibiting
governing board, disciplinary committee and oversight panel members from
deliberating or voting on certain matters. Effective
Date: March 5, 1999. Vol. 64, No. 1, 01/04/99, p. 16.
The Commodity Futures Trading Commission had adopted final rules relating
to Commission records and information. The rules update and streamline
procedures in light of the Commission's experience in the past
several years and amend rules regarding open Commission meetings to
conform to these modifications. Effective Date: February
3, 1999. Vol. 64, No. 1, 01/04/99, p. 24.
The New York Futures Exchange has applied to trade in Russell 1,000 Large
Index futures and Russell 1,000 Large Index options. Vol. 64, No. 1,
01/04/99, p. 149.
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NOTE:
All Comment Letters must be received by the Commission no later than the closing date specified in the applicable Federal Register release. Any requests for an extension of the comment period must be made in writing - - before the expiration of the comment period - - to the Commission's Office of the Secretariat.
Comment period concerning the Chicago Board of Trade's application to
trade futures and options on PJM (Pennsylvania-New Jersey-Maryland)
Western Hub electricity ends,January 8, 1999.
Comment period concerning the New York Futures Exchange's application
to trade futures and options on the Russell 1,000 Large Index ends,
January 19, 1999.
Comment period concerning the Kansas City Board of Trade's
application to trade futures and options on Internet Stock Price Index
"ISDEX�" ends, January 25, 1999.
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Debra Michel v. Refco, Incorporated, Dearborn Capital Management, Ltd., and John Joseph Aiello. Filed December 30, 1998. The parties resolved their dispute and filed a joint stipulation of dismissal. Accordingly, this matter was dismissed. Philip V. McGuire, Judgment Officer. CFTC Docket No. 98-R12.
XF, Incorporated v. Spike Trading, LLC., and Jak Lee
Burtucci. Filed December 30, 1998. After a careful review of the
parties' submissions, it was concluded that the complainant had
failed to establish any violations causing damages. Accordingly, this
matter was dismissed. Philip V. McGuire, Judgment Officer. CFTC Docket
No. 98-R174.
Michael Falk v. Geldermann, Inc. and Anthony William
Stack. Filed January 4, 1999. The parties' filed a
stipulation of dismissal. Accordingly, the complaint was dismissed with
prejudice and this matter was terminated in its entirety. Administrative
Law Judge, Bruce C. Levine. CFTC Docket No. 98-R150.
Robert I. Wayne v. FSG International, Inc., Kenneth Scott Gruber
and Mitchell Allen Gross. Filed January 4, 1999. The parties
filed a joint stipulation of dismissal. Accordingly, the complaint was
dismissed with prejudice and the matter was terminated in its entirety.
Administrative Law Judge, Bruce C. Levine. CFTC Docket No. 98-R145.
Earnest Marion King v. Joseph Thomas Profit, Jr. Filed
January 5, 1998. Complainant King informed the Office of Proceedings that
he had received the final payment from the respondent. Accordingly, this
matter was dismissed. Philip V. McGuire, Judgment Officer. CFTC Docket
No. 98-R198.
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Sharon Jean Dawson v. Carr Investments, Inc., Et Al. Filed December 31, 1998. Respondents sought interlocutory review of the October 30, 1998, order of the Administrative Law Judge denying their motion to reopen the record and issue subpoenas in the above-captioned reparations proceeding. Respondents separately sought interlocutory review of the ALJ's November 30, 1998, order denying respondent's motion for disqualification. The Commission has considered the issues raised by respondent's applications. Under the Commission's rules, consideration of interlocutory appeals are discretionary and are granted only in extraordinary circumstances. Based upon the Commission's review of the record and the parties' submissions, the Commission did not believe that interlocutory review of the ALJ's orders was warranted. Accordingly, the applications for interlocutory review were denied. CFTC Docket No. 96-R-101.
Stephen Briggs v. News York Mercantile Exchange. Filed
January 7, 1999. On May 11, 1998, Briggs filed a notice of appeal and
petition for stay from a final order of the New York Mercantile Exchange.
On May 22, 1998, the Commission issued an order denying Brigg's stay
request. Briggs appealed and his notice of appeal was accepted. Under
Commission rules, Briggs had until July 1998 to perfect his appeal.
Briggs failed to file his brief by the date required and, consequently,
his appeal was dismissed. CFTC Docket No. 98-E-2.
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99-01; Interpretation; December 23, 1998; The Division
of Trading and Markets (Division) expressed its view that, if an entity
is registered as both a guaranteed introducing broker (IBG) and a
commodity pool operator (CPO) and clearly separates its activities such
that, when it is performing CPO functions, it is not also acting as an
introducing broker, then the restriction of Commission Rule 1.57(a) would
not apply with respect to a pool account. Rule 1.57(a) requires generally
that an IBG introduce all customer accounts to its guarantor futures
commission merchant on a fully-disclosed basis. [Rule 1.57 (a)]
(T&M).
99-02; Interpretation; December 23, 1998; The Division
of Trading and Markets (Division) affirmed its previous interpretation
that a party who refers potential customers either directly or by
providing lists of names to a Commission registrant in return for direct
or indirect compensation must register as an introducing broker (IB). The
Division also confirmed that the IB registration requirements could apply
to persons who sponsor futures related seminars that are attended by
associated persons (APs) of Commission registrants and stated that
permitting registrants to send APs to seminar for a fee in order to
solicit other attendees may itself constitute a referral by a seminar
sponsor. [Section 4d of the Act] (T&M).