For Release: June 11, 2003
CFTC FINDS THAT MISSISSIPPI RESIDENT AND HIS FOREIGN CURRENCY FIRM SOLICITED CUSTOMERS FRAUDULENTLY
WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) announced today the simultaneous filing and settlement of an action against Michael Gene Pate and American FX, LLC (AFX) of Tupelo, Mississippi, for fraudulently soliciting customers to invest in foreign currency futures contracts.
As a result of the action, the CFTC order entered on June 6, 2003, finds that between April 2002 and July 2002, Pate and AFX created and used an internet website to solicit money from the public and claimed that the funds would be invested in the E-FX Fund.
Specifically, the order finds that 1) Pate and AFX web-posted the purported track record of the E-FX Fund for a 12-month period, showing 11 months of profitable trading and an annual return of over 62 percent, 2) the E-FX fund never traded and, thus, the track record was false, and 3) Pate and AFX falsely told customers that their funds would be maintained in a separate account when, in fact, Pate and AFX mixed some customer funds with AFX operating funds.
While neither admitting nor denying the order.s findings, Pate consented to the findings, including findings that he and AFX.s solicitations violated the anti-fraud provisions of the federal commodity laws (the Commodity Exchange Act) and that they offered illegal foreign currency futures contracts to the retail public. Pate also consented to the order directing him to stop further such violations and requiring him to pay a $15,000 civil monetary penalty and not to apply for registration for five years.
The following CFTC Division of Enforcement staff were responsible for the case: Gretchen L. Lowe, Richard Glaser, Matthew Elkan, and Margaret Kanyan.
A copy of the CFTC order can be found at www.cftc.gov.
Media Enforcement Contact:
Gretchen L. Lowe
CFTC Division of Enforcement
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A CFTC Consumer Advisory Warns the Public of the Risks of
Foreign Currency (FOREX) Trading and Foreign Currency Scams
The CFTC has issued a Consumer Advisory urging the public to scrutinize claims of high-return, low-risk investment opportunities in foreign currency (FOREX) trading. This Consumer Advisory provides "red flags" to look for, and cautionary steps to be taken, before making an investment. See Beware of Foreign Currency Trading Frauds, March 8, 2001 (www.cftc.gov/cftc/cftccustomer.htm).
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