Release: 4316-99 (SD-99-8)
For Release: September 29, 1999
CFTC FILES DISQUALIFICATION ACTION AGAINST ANDREW DAVID RHEE AND REFLEX ASSET MANAGEMENT CORPORATION
WASHINGTON - The Commodity Futures Trading Commission (CFTC) announced that it filed a Notice of Intent to Suspend, Restrict or Revoke Registration (Notice) against Andrew David Rhee of Miami Beach, Florida and Reflex Asset Management Corporation, a Delaware corporation. Rhee, the sole owner of Reflex, is registered with the CFTC as an associated person (AP) of Reflex. Reflex is registered with the CFTC as a commodity pool operator (CPO) and a commodity trading advisor (CTA).
The CFTC's Notice, filed on September 20, 1999, alleges that Rhee and Reflex are subject to disqualification from registration based on their involvement in a frontrunning scheme, which resulted in profits of approximately $4.7 million. As alleged in the Notice, on July 23, 1998, the U.S. Attorney's Office for the Southern District of New York filed a criminal information captioned United States v. Thomas Edmund Kelly and Andrew David Rhee, 98 CR 789 (RPP), charging that Rhee and Thomas Edmund Kelly conspired to commit wire fraud by misappropriating confidential proprietary information from John W. Henry & Co. (JWH), a registered CPO and CTA, and used that information to place commodity futures trades ahead of JWH's futures trades, for the benefit of Rhee, Reflex, and Kelly, and to the detriment of JWH. Rhee and Kelly pled guilty to the criminal felony conspiracy to commit wire fraud charge and, on December 7, 1998, were each sentenced to 33 months in prison.
As further alleged in the CFTC's Notice, on July 23, 1998, the same day as the criminal information was filed, the CFTC filed a two-count civil injunctive action in federal district court in the Southern District of New York against Rhee, Reflex, and Kelly charging them with fraud under sections 4b and 4o of the Commodity Exchange Act (CEA) in connection with their scheme to trade ahead of JWH's futures orders. CFTC v. Kelly, et al., No. 98 Civ. 5270 (JSR). (See CFTC News Release #4171-98, July 23, 1998.) On November 8, 1998, Rhee, Reflex, and Kelly consented to the entry of a permanent injunction against them in the CFTC's civil action which, among other things, required disgorgement of more than $2 million and permanently barred Rhee, Kelly, and Reflex from the futures industry. (See CFTC News Release #4206-98, November 18, 1998.)
The CFTC's Notice alleges that Rhee and Reflex are subject to statutory disqualification from registration with the CFTC under sections 8a(2)(C) and 8a(2)(D) of the CEA because of the injunctions entered against them, that Rhee is also subject to disqualification, pursuant to section 8a(2)(D) based on his felony conviction, and that Reflex is subject to statutory disqualification because the statutory disqualification of its principal, Rhee, is warranted under section 8a(2)(C) and 8a(2)(D) of the CEA.
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