For Release: August 28, 2001
GEORGIA DEFENDANTS SETTLE COMMODITY FRAUD CHARGES
CFTC Permanently Bans James E. Stephens, III, And Trendsystems, Inc. from Trading on Behalf of Others
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today the entry of a federal court order permanently prohibiting the fraudulent activities of Trendsystems, Inc., a registered commodity trading advisor (CTA), and its president and sole owner, James E. Stephens, III, both formerly of Americus, Georgia. The order stems from an injunctive action filed by the CFTC in October 2000 charging Trendsystems and Stephens with commodity futures and options fraud and misappropriation of client funds (see CFTC Release 4463-00, Oct. 25, 2000).
Specifically, the CFTC alleged that from at least February 2000 until October 2000, Trendsystems and Stephens solicited the general public to open accounts for the purpose of trading commodity futures and options. As alleged, defendants falsely represented to investors that defendants were profitably trading on their behalf, when, in fact, there were no profitable trades. The complaint further alleges that for the most part, defendants seldom used clients’ funds for trading, but instead misappropriated investor proceeds.
The consent order entered by the U.S. District Court for the Middle District of Georgia on August 21, 2001, finds that Trendsystems and Stephens violated the anti-fraud provisions of federal commodity laws and requires Stephens to pay a contingent civil monetary penalty of up to $111,834.54 and $62,448.14 in restitution to defrauded investors, pursuant to a payment plan. The order also bars defendants from ever again trading commodity futures or options for the public, imposes ten-year personal trading bans on defendants, and bars them from ever being registered with the CFTC in any capacity.
Trendsystems and Stephens neither admitted nor denied the order’s findings.
In a separate action, filed and simultaneously settled on August 24, 2001, the CFTC revoked Trendsystems’ registration as a CTA.
Notice of Intent to Suspend, Revoke, or Restrict Registration
A copy of the CFTC order may be found at http://www.cftc.gov.
Richard B. Wagner
Division of Enforcement
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