CFTC News Release 4403-00 (CFTC Docket No. 00-20)
For Release May 31, 2000
CFTC FILES AND SETTLES ADMINISTRATIVE ENFORCEMENT ACTION AGAINST STANLEY C. HARLEY FOR FAILING TO REGISTER AS A COMMODITY TRADING ADVISOR AND TO DELIVER REQUIRED DISCLOSURE DOCUMENTS
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced today the issuance of an order instituting and simultaneously settling an administrative proceeding against Stanley C. Harley of Camarillo, California.
The CFTC order finds that from at least November 1998 to March 2000, Harley acted as a commodity trading advisory (CTA) by directing trading in numerous commodity futures trading accounts pursuant to powers of attorney, without being registered with the CFTC as a CTA, in violation of section 4m(1) of the Commodity Exchange Act (CEA).
The order finds that in July 1999, Harley had filed with the Commission a Notice of Exemption, in which he claimed he was exempt from registration as a CTA pursuant to section 4.14(a)(8) of the Commission’s regulations, which exempts from registration, among others, a person registered as an investment adviser (IA) with the Securities and Exchange Commission (SEC). As the order further finds, however, Harley was not entitled to this exemption because, among other reasons, he was no longer registered with the SEC at the time he filed the Notice of Exemption.
The CFTC order also finds that Harley solicited prospective clients and entered into agreements with prospective clients to direct and/or guide their commodity interest accounts without first delivering to the prospective clients the required CTA Disclosure Document and without obtaining from those clients a signed acknowledgement of receipt of the Disclosure Document, in violation of regulation 4.31(a) and (b).
Without admitting or denying the findings of the order, Harley consented to the entry of the CFTC order that (1) finds that he violated section 4m(1) of the CEA and regulation 4.31(a) and (b); (2) directs him to cease and desist from further violations as charged; and (3) orders him to pay a civil monetary penalty in the amount of $10,000. In addition, the order requires Harley to, among other things, comply with his undertakings not to engage in any activity which requires registration with the CFTC as a CTA, including directing trading in client accounts, until he registers with the CFTC as a CTA; delivers to all existing and prospective clients a Disclosure Document for the trading program pursuant to which Harley will direct or guide clients’ trading; and obtains from all clients an acknowledgment of receipt of the CTA Disclosure Document.
Notes To Editor
Harley had earlier withdrawn his IA registration with the SEC due to changes in the law. As of May 1997, any IA that is regulated or required to be regulated in the state in which he maintains his place of business is prohibited from being registered with the SEC unless, among other things, he has assets under management of not less than $25 million. Harley was registered as an IA with the State of California and had assets of less than $25 million under management. Thus, as the order finds, he was not registered with the SEC as an IA and could not claim an exemption from registration as a CTA under section 1.14(a)(8) of the Commission’s regulations.
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