U.S. COMMODITY FUTURES TRADING COMMISSION OBTAINS PRELIMINARY INJUNCTION PREVENTING FLORIDA COMMODITY TRADING FIRM, UNITED INVESTORS GROUP, INC. AND FIVE EMPLOYEES, FROM VIOLATING THE COMMODITY EXCHANGE ACT
Nearly 98 Percent Of Accounts Opened At UIG Between August 2003 And June 2004 Lost Money Trading Commodity Options
Customers Lost More Than $6.1 Million, While UIG Charged Over $4.25 Million In Commissions And Fees
WASHINGTON, D.C.—The U.S. Commodity Futures Trading Commission (CFTC) announced today that on June 9, 2005, the Honorable Daniel T. K. Hurley of the United States District Court for the Southern District of Florida issued an order of preliminary injunction against United Investors Group, Inc. (UIG), a commodity trading firm in Boca Raton, Florida;traders Greg P. Allotta and Michael H. Savitsky III, both of Boca Raton, and Jay M. Levy of Aventura, Florida; UIG principal Paul F. Plunkett of Deerfield, Florida; and former UIG principal Andrew D. Ross of Boca Raton, Florida.
The court’s order enjoins the defendants from violating certain anti-fraud provisions of the Commodity Exchange Act (CEA) and CFTC regulations. The order also continues the asset freeze previously entered against all defendants.
The order of preliminary injunction stems from a CFTC complaint filed on filed on January 3, 2005 (see CFTC News Release 5037-05).The complaint alleges that, beginning in August 2003, UIG and several of its traders, including Allotta, Levy, and Savitsky, fraudulently solicited customers to open accounts to trade options on commodity futures contracts through UIG by combining high-pressure sales tactics with fraudulent misrepresentations about the likelihood of profits, the level of risk involved in trading options, and their purported success in trading.
The CFTC complaint further alleges that, from August 2003 to June 2004, approximately 98 percent of the 364 accounts opened at UIG during that time lost money trading commodity options -- for a total loss of more than $6.1 million -- while, for the same time period, UIG charged more than $4.25 million in commissions and fees.
The order, issued after an evidentiary hearing, adopts in full the recommended findings of fact and conclusions of law regarding defendants' conduct set forth in a report and supplemental report issued by United States Magistrate Judge James Hopkins.The report states that it is "troubling . . . that Defendants have developed a pattern of misleading customers regarding the profit and loss potential of purchasing options, developing an extraordinarily high loss rate, and then closing up shop." The report further states that "there is reason to believe that the defendants have committed violations of the [CEA]" and that "[a]bsent a preliminary injunction, . . . defendants will continue to engage in sales practices in violation of the CEA."
In its continuing litigation against defendants, the CFTC is seeking permanent injunctive relief, the return of funds to defrauded customers, repayment of ill-gotten gains, and an award of civil monetary penalties.
The following CFTC staff members are responsible for this case: Charles Marvine, Rachel Hayes, Lacey Dingman, and Richard Glaser.
* * * * * * * * * * * * * *
The CFTC encourages members of the public to bring to our attention any suspicious activities involving futures or commodity options, including matters involving foreign currency (forex) investments or suspicious Internet websites.
You may contact the CFTC at 1-866-FON-CFTC (1-866-366-2382), visit us at our Customer Protection web page: (www.cftc.gov/cftc/cftccustomer.htm), or fill out our Internet Report Form identifying your concerns (www.cftc.gov/enf/enfform.htm).
In addition, the CFTC publishes a series of Consumer Advisories at http://www.cftc.gov/cftc/cftccustomer.htm#advisory alerting the public to warning signs of possible fraudulent activity and offering precautions individuals should take before committing funds.
# # #