Release: #4282-99 (CFTC Docket No. 99-8)

For Release: June 29, 1999


CFTC Settlement Order Finds that Gaiber Acted as an Unregistered CTA and Failed to Deliver Disclosure Documents and to Disclose His Past Performance Record

WASHINGTON The Commodity Futures Trading Commission (CFTC) announced today that it issued an order accepting an offer of settlement from Selwyn "Sy" Gaiber of Indian Wells, California, in connection with a complaint filed by the CFTC on March 4, 1999 (see CFTC News Release #4242-99, March 5, 1999).

The CFTC order, issued on June 23, 1999, finds that Gaiber violated section 4m(1) of the Commodity Exchange Act (CEA) by failing to register as a commodity trading advisor (CTA). The order further finds that Gaiber also violated certain regulations governing the conduct of CTAs.

More specifically, the CFTC order finds that from January 1997 through December 1997, Gaiber furnished commodity trading advice to more than 15 members of the Bulls and Bears Club, a private investment club Gaiber co-founded. The order finds that he was required to register as a CTA, and by failing to do so, he violated section 4m(1) of the CEA. As alleged, the order finds that Gaiber held weekly investment seminars at the club where he provided commodity trading advice and described specific trading strategies to both club members and non-members. He also recommended trades to club members, either individually or in small groups, while they were present at the club, according to the order. Finally, the order finds that, pursuant to discretionary trading authority, he directed the trading in the commodity trading accounts of seven of the members and the account of a commodity pool formed by some of the club members.

In addition, the order further finds that Gaiber violated CFTC regulations by entering into agreements with prospective clients to direct such clients' commodity interest accounts, without delivering to them any documents disclosing the risks associated with managed commodity accounts or the record of his performance in directing the trading of commodity accounts.

Gaiber, without admitting or denying the findings, consented to the entry of the order that: 1) directs him to cease and desist from violating section 4m(1) of the CEA and sections 4.31, 4.34 and 4.35 of CFTC regulations; 2) prohibits him, for three years, from trading on or subject to the rules of any contract market; and 3) requires him to comply with certain undertakings, including never to apply for registration with the CFTC in any capacity, never to engage in any activity requiring such registration, and never to act as an agent or officer of any person registered or required to be registered with the CFTC.

In the order, the CFTC notes that a civil monetary penalty against Gaiber would be appropriate in this case, but does not impose such a penalty based upon Gaiber's demonstrated financial condition.

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