U.S. COMMODITY FUTURES TRADING COMMISSION CHARGES CLEVELAND COMMODITIES FIRM, ITS PRESIDENT AND TWO FORMER EMPLOYEES WITH FRAUD
Carnegie Trading Group Ltd., Inc. Allegedly Used Fraudulent Statements to Solicit Customers to Trade Commodity Futures and Options
WASHINGTON, D.C.---The U.S. Commodity Futures Trading Commission (CFTC) announced today the filing of a complaint in the United States District Court for the Northern District of Ohio against Carnegie Trading Group, Ltd., Inc., (Carnegie), a Cleveland firm, and Ohio residents John Glase (Glase) of Bay Village, John Hollenbaugh (Hollenbaugh) of North Lawrence, and Reid Henshaw (Henshaw) of Barberton, charging them with fraud in connection with Hollenbaugh’s and Henshaw’s solicitation of, and their trading recommendations to, customers.
Specifically, the complaint alleges that Hollenbaugh and Henshaw represented to customers and potential customers of Carnegie that they could double or triple their money in a couple of weeks, and that the risk of losing their investment was very low and at worst they would either break even or suffer a small loss. According to the complaint, Hollenbaugh and Henshaw also failed to advise customers and potential customers that year-in and year-out, approximately nine out of ten of Carnegie’s customers lost money. Carnegie also is alleged to have distributed to certain customers a false and misleading advertisement regarding a proposed trading program.
The complaint alleges that these actions violated the anti-fraud provisions of the federal commodity laws.
The complaint also alleges that Glase, who is President of Carnegie, is liable for these violations as a controlling person of Carnegie, and is liable for failing to supervise diligently Carnegie’s employees.
In the continuing litigation, the CFTC is seeking preliminary and permanent injunctive orders enjoining future violations, requiring repayment of funds to defrauded customers, and imposing civil penalties.
The following CFTC Division of Enforcement staff are responsible for this case: Susan Gradman, Frank Ferrara, Michael Tallarico, William Janulis, Venice Bickham, Scott Williamson, and Rosemary Hollinger.
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