FEDERAL COURT ENJOINS VISALIA, CALIFORNIA COMMODITIES TRADER AND HIS COMPANY FROM VIOLATING THE COMMODITY EXCHANGE ACT
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) today announced that the United States District Court for the Central District of California has issued a consent order of permanent injunction against Donald Steven Smith and his company, Fibit.com, of Visalia, California, finding that Smith and Fibit.com violated the Commodity Exchange Act (CEA) in their capacities as commodity pool operators (CPOs) and that Smith violated the CEA as a commodity trading advisor (CTA).
The court’s order stems from a complaint filed by the CFTC in June 2002 (see CFTC News Release 4660-02, June 24, 2002).
Specifically, the order finds that Smith, who was formerly registered with the CFTC as a CTA, operated a trading signals service under the trade name Fibit.com, which he advertised in futures magazines of national circulation and over the internet. According to the order, in April 2000, Smith and Fibit.com began operating a commodity pool for some of their signals service customers. The order finds that they commingled the pool’s funds with their own funds, engaged in unauthorized trading, and failed to provide required monthly account statements to their pool participants, all in violation of the CEA.
The order further finds that Smith violated CFTC registration requirements by, among other things, managing individual clients’ trading accounts after his registration as a CTA had lapsed. Finally, the order finds that Smith and Fibit.com failed to comply with CFTC record-keeping requirements applicable to CPOs and CTAs.
The order requires Smith to pay a $15,000 civil monetary penalty, imposes five-year trading and registration bans on Smith and Fibit.com, and permanently enjoins them from violating the provisions of the CEA that they are found to have violated, including engaging in any transaction, practice, or course of business which operates as a fraud or deceit upon any client.
The following Division of Enforcement staff are responsible for this action: John Wise, W. Derek Shakabpa, David Acevedo, Lenel Hickson, Jr., Stephen J. Obie, and Richard B. Wagner.
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