For Release: June 24, 2002
CALIFORNIA COMMODITY TRADER CHARGED WITH UNAUTHORIZED TRADING, UNLAWFULLY OPERATING A COMMODITY POOL AND ILLEGALLY MANAGING TRADING ACCOUNTS
CFTC Files Complaint Against Donald Steven Smith and His Company, Fibit.com, in Federal District Court
WASHINGTON, D.C. – The Commodity Futures Trading Commission (CFTC) announced the filing of a seven-count injunctive complaint against Donald Steven Smith and Fibit.com of Visalia, California. The CFTC complaint charges the defendants with violating the Commodity Exchange Act (CEA) by, among other things: unauthorized trading of commodity pool funds; failing to provide account statements to investors in a commodity pool; commingling funds of the pool with personal and other funds; and registration, disclosure, and record-keeping violations.
The complaint, filed on June 20, 2002, in the U.S. District Court for the Central District of California, alleges that Smith, who was formerly registered with the CFTC as a commodity trading advisor (CTA), operates a trading signals service under the trade name Fibit.com. The complaint further alleges that the defendants, who began operating a small commodity pool in April 2000, unlawfully commingled the pool’s funds with their own funds and failed to provide customers with required account statements and past performance disclosure documents. In addition, according to the complaint, the defendants fraudulently continued trading after two of their customers demanded that they cease trading and return their remaining account balances.
The complaint also alleges that Smith violated CFTC registration requirements by managing customer accounts and soliciting and accepting customer funds to be traded under his own name, after his registration as a CTA had lapsed. The complaint further alleges that Smith failed to comply with CFTC record-keeping requirements.
In its continuing litigation, the CFTC is seeking preliminary and permanent injunctive relief, restitution for customers, disgorgement of ill-gotten gains, and civil monetary penalties up to $120,000, or triple the monetary gain to defendants, whichever is greater, for each violation of the CEA.
A copy of the CFTC complaint may be obtained at http://www.cftc.gov.
The following Division of Enforcement staff are responsible for this action: John Wise, James Andreozzi and Jack Barrett.
Senior Trial Attorney
CFTC Division of Enforcement
Los Angeles, CA
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