For Release: September 27, 1999
CFTC FILES CIVIL INJUNCTIVE ENFORCEMENT AGAINST DENVER-BASED CLAIRMONT CAPITAL CORP., AND ITS PRINCIPALS, GEOFFREY L. MANN AND CHARLES W. TRENCH, CHARGING THEM WITH FRAUD AND SELLING ILLEGAL FOREIGN CURRENCY OPTIONS
CFTC Action Charges That The Defendants Made False Representations Regarding Potential Profits and Risks
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced that it filed today a three-count injunctive complaint in the U.S. District Court for the District of Colorado against Clairmont Capital Corp. (Clairmont), a Colorado corporation with offices in Denver, Colorado, and its principals: Geoffrey L. Mann, president, and Charles W. Trench, vice president, charging them with, among other things, making material misrepresentations and omitting material facts in connection with the sale of illegal foreign currency options contracts. Mann, of Denver, Colorado, is not currently registered with the CFTC, and Trench, also of Denver, has never been registered with the CFTC.
The CFTC's complaint alleges that the defendants violated the anti-fraud provisions of the Commodity Exchange Act (CEA) and CFTC regulations, specifically section 4c(b) of the CEA and regulation 32.9, in connection with the solicitation and offer or sale of commodity options contracts to customers or prospective customers. The CFTC also alleges that the defendants sold illegal commodity options and failed to give required disclosures to customers, in violation of sections 4c(b) of the CEA and regulations 32.5, 32.11, and 33.3(a).
The CFTC complaint alleges that from July 1998 through the present, Clairmont, Mann, and Trench, among other things, cheated, defrauded, and deceived customers by making misrepresentations of material fact regarding the likelihood of profit and the limited risk of loss in trading foreign currency option contracts; by failing to provide customers with material information concerning fees; and by failing to disclose to customers that Clairmont was the grantor of the options it recommended to customers.
Specifically, the complaint alleges, among other things, that Clairmont represented to potential customers that they could earn as much as 100 percent to 200 percent trading options on Japanese Yen, when, in fact, virtually all customers lost a substantial portion of their money investing with Clairmont, and omitted to tell customers that Clairmont routinely charges a $250 "mark up" on each option in addition to a $250 commission. The complaint also alleges that Clairmont offered to enter into, and entered into, commodity options transactions not conducted on, or subject to, the rules of a board of trade that has been designated by the CFTC as a contract market.
The CFTC, in its complaint, charges Mann and Trench individually with directly violating the anti-fraud provisions of the CEA and with being a controlling person responsible for Clairmont's illegal acts under section 13(b) of the CEA.
Phyllis J. Cela, Acting Director of the CFTC's Division of Enforcement, commented: "This case is part of the Commission's enforcement program's continued effort to protect the retail public from fraudulent foreign currency schemes. We would like to remind individuals considering trading in foreign currencies that the Commission released a Consumer Advisory on Foreign Currency Trading Fraud, which provides warning signs of possible fraudulent activity. The advisory is posted on the CFTC's website: www.cftc.gov."
In its continuing litigation against the defendants, the CFTC is seeking orders of preliminary and permanent injunction, in addition to other remedial relief including disgorgement of ill-gotten gains, restitution to defrauded investors, and civil monetary penalties not exceeding $110,000 or triple the monetary gain to the defendants, whichever is greater, for each violation of the CEA or CFTC regulations.
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