Release: 4564-01
For Release: September 4, 2001


CFTC Alleges that Broker Alfred Gladstone Fraudulently Claimed That He Made Millions In Profits When In Fact, His Customers Had Net Losses Of Over $1 Million

Although 99% Of His Customers Lost Money, Broker Told Them That Their Investments Were “a Sure Bet”

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today the filing of an administrative action against Alfred Albert Louis Gladstone (Gladstone) of Woodland Hills, CA, formerly a registered associated person of various commodity firms. The CFTC charges that Gladstone, while working at the Los Angeles Branch of commodity firm FSG International Inc, fraudulently solicited customers to purchase commodity options.

Specifically, the CFTC complaint alleges that, from approximately January 1998 to May 2000, Gladstone fraudulently solicited customers by falsely claiming that customers would realize large profits from trading commodity options, minimizing the risks involved, and misrepresenting the performance record of his customers. For example, as alleged, Gladstone claimed that he was offering investors “a sure bet” and that they could easily triple their investment. In addition, as further alleged, Gladstone fraudulently reassured customers that his “sound advice” would make them money, that all his customers were making money, that he made millions for his customers, and that his customers would be among the 10% of commodity investors that make “big bucks.”

In sharp contrast to those fraudulent claims, the complaint alleges that nearly 99% of Gladstone’s customers who closed accounts over a two-year period lost all or virtually all of the funds they invested, with trading losses totaling over $1 million dollars. Only one customer made a profit, according to the complaint. As further alleged, at the same time as the fraud, Gladstone was collecting commissions from his customers’ trading. Gladstone’s commissions for 1999 alone were allegedly over $1.2 million.

A public hearing has been ordered to determine whether the allegations are true and, if so, what sanctions are appropriate and in the public interest. Possible sanctions include cease and desist order, restitution to defrauded customers, civil monetary penalties, trading prohibitions and registration revocations, suspensions or restrictions.

Case Contact:
Richard Wagner
Associate Director
Division of Enforcement
(202) 418-5390

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