For Release: January 20,
HAWAII COURT ISSUES PRELIMINARY INJUNCTION IN CFTC ENFORCEMENT
ACTION AGAINST BRIEN SULLIVAN
WASHINGTON -- The Commodity Futures Trading Commission (CFTC)
announced today that on January 6, 1998, the Honorable Alan C. Kay of
the U.S. District Court for the District of Hawaii entered an order of
preliminary injunction against Brien Sullivan, doing
business as Brien Sullivan Capital Management and as
Lava Trading. Sullivan formerly lived in Honolulu,
Hawaii and has never been registered with the CFTC.
The court's preliminary injunction stems from a five-count
anti-fraud civil injunctive complaint filed on October 23, 1997,
alleging, among other things, that since January 1994 Sullivan engaged
in a fraudulent scheme whereby he defrauded investors in individual
futures accounts under his management and in a commodity pool that he
controlled, in violation of the Commodity Exchange Act (CEA) and CFTC
regulations (see CFTC News Release #4067-97, October 23, 1997).
Preliminary Injunction Effectively Bars Sullivan from the
The court's preliminary injunction enjoins Sullivan from violating
the anti-fraud provisions of the CEA and CFTC regulations as charged,
prohibits him from soliciting customer funds, from trading any
commodity futures account for himself or for others and from engaging
in any activities related to the business of commodity futures
trading, and requires him to make an accounting of his assets.
Specifically, the CFTC complaint alleges that Sullivan induced his
friends and acquaintances to become investors by falsely representing
that he would trade their money in accounts with legitimate futures
commission merchants (FCMs), either in their individual names or
through a commodity pool. However, Sullivan allegedly did not open any
actual FCM accounts in customers' names. Instead, he allegedly
pooled only 5 percent of the $450,000 that at least 15 customers
entrusted to him in his own FCM account.
In addition, the CFTC alleges that Sullivan mailed false account
statements to his customers on the letterhead of Lava Trading showing
profitable but fictitious futures trading. The CFTC further alleges
that trading records from Sullivan's personal accounts show that
he used very little of his pool participants' money in futures
trading, that his actual trading bore no relationship to the trading
reflected on Lava Trading's false account statements, and that he
misappropriated most of his customers' money.
In its litigation against Sullivan, the CFTC is also seeking a permanent civil injunction in addition to other remedial relief, including an accounting, disgorgement of unlawfully obtained benefits, and civil penalties in amounts of not more than the higher of $110,000 ($100,000 for violations occurring before November 28, 1996) or triple the monetary gain to Sullivan for each violation of the CEA and CFTC regulations.