CFTC News Release 4383-00 (Civ-97-2927)

For Release March 21, 2000

NEW JERSEY COURT ENTERS PERMANENT INJUNCTION AND RESTITUTION ORDER IN CFTC INJUNCTIVE ACTION AGAINST MURRAY IRA ROSENBERG AND PRO BROKER SERVICES, INC., CHARGING COMMODITY FUTURES AND OPTION FRAUD

Court Permanently Bars Rosenberg From Trading For Others, and Requires Him to Pay $265,000 in Restitution

WASHINGTON ó The Commodity Futures Trading Commission (CFTC) announced today that on March 2, 2000, the Honorable Stephen M. Orlofsky of the U.S. District Court for the District of New Jersey entered an order of permanent injunction against Murray Ira Rosenberg of Mullica Hill, New Jersey, and against his company Pro Broker Services, Inc. (Pro Broker). The court found that the defendants defrauded a customer by making material misrepresentations concerning the handling of and use of customer funds and by misappropriating $265,000 of the customerís funds. The order arises out of a six count injunctive complaint filed by the CFTC on June 18, 1997 (see CFTC News Release 4029-97, June 19, 1997).

After a three-day bench trial, the court found that beginning in the Spring of 1993, Rosenberg induced the customer to send him money by telling him that Rosenberg and Pro Broker would open a futures and options account in the customerís name at a registered trading firm and execute the customerís trades. In fact, the court found, the account was in Rosenberg's name and that, although Rosenberg reported that he had executed the customerís trades, the defendants did not do so. The court also found that on at least two occasions Rosenberg sent the customer false tax forms purporting to reflect the trading results in the customerís trading account. Additionally, the court found that Rosenberg withdrew most of the money out of the trading account and used it for his personal and business expenses, including trading losses incurred trading commodity options for himself.

In his ruling the Judge stated: "There is overwhelming evidence that Rosenberg's misrepresentations were made intentionally and with knowledge of their falsity."

The court also rejected Rosenberg's defense that he and the customer had formed a partnership, noting that, "This court finds wholly incredible Rosenberg's assertion that he and [the customer] had formed a partnership whereby Rosenberg was authorized to use the capital for his personal expenses and that his supposed training of [the customer] permitted the use of [the customerís] funds." The court further found Rosenberg to be "evasive, uncooperative, and border[ing] on incorrigible." Conversely, the court found the CFTC's customer witness to be "highly credible."

The court found that defendants Rosenberg and Pro-Broker had violated the antifraud provisions, among others, of the Commodity Exchange Act (CEA). The court permanently enjoined both defendants from further violations of sections 4b(a), 4c(b), 4d(1)-(2), and 9(a)(1) of the CEA and from trading commodity futures and options on behalf of any other person or entity. Additionally, the court ordered the defendants to pay $265,000 in restitution.

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