Release: #4039-97 (CFTC Docket #97-12)
For Release: July 31, 1997
CFTC FILES ADMINISTRATIVE COMPLAINT CHARGING CURTIS McNAIR ARNOLD AND LONDON FINANCIAL, INC. WITH FRAUD AND FAILURE TO REGISTER IN CONNECTION WITH MARKETING, SALE AND TRADING OF PATTERN PROBABILITY STRATEGY TRADING SYSTEM
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced the filing on July 30, 1997, of a five-count administrative complaint against Curtis McNair Arnold of Jupiter, Florida, and London Financial, Inc. (LFI), a Florida corporation with its principle place of business in Tequesta, Florida. Arnold is president and sole principal of LFI, and neither is registered with the CFTC in any capacity.
The CFTC complaint charges Arnold and LFI with violating the anti-fraud provisions of the Commodity Exchange Act and CFTC regulations since 1994 by fraudulently soliciting customers to purchase a commodity futures trading system known as Pattern Probability Strategy (PPS). The complaint also alleges that the respondents since at least 1996 have expanded their fraudulent marketing to include other trading systems, some authored by Arnold and some by other system vendors.
Specifically, the complaint alleges that Arnold and LFI, among other things:
misrepresented Arnold's personal trading results and the historic profitability of PPS; and
failed to disclose that certain trading results were based on hypothetical trades, rather than on actual trading results.
Arnold and LFI are also charged with acting as unregistered commodity trading advisors, since at least 1992. Arnold is further charged in the complaint with acting as an unregistered commodity pool operator and as an unregistered associated person of a commodity pool operator.
A public hearing is to be held to determine whether the allegations in the complaint are true and to determine what sanctions should be imposed. Possible CFTC sanctions include:
-- a cease and desist order prohibiting the respondents from violating provisions of the CEA and CFTC regulations;
-- registration restrictions;
-- trading prohibitions; and
-- civil penalties of not more than the higher of $100,000 ($110,000 for violations committed after November 27, 1996) or triple the monetary gain to each respondent for each violation of the CEA and CFTC regulations, among other remedial sanctions.