Release Number 6839-14
January 24, 2014
Federal Court Orders California Defendants CTI Group, LLC, Cooper Trading, Stephen Craig Symons, and James David Kline to Pay Over $29 Million in Disgorgement and Fines for Fraudulent Sale of Automated Trading Systems
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York entered a Consent Order for Permanent Injunction (Order) against Defendants CTI Group, LLC, a California limited liability company, Cooper Trading, a California corporation (collectively, CTI), Stephen Craig Symons of Corona del Mar, California, and James David Kline, who was a resident of Van Nuys, California, for fraudulent sales practices in connection with the sale of two automated trading systems (Trading Systems), known as Boomer and Victory.
The court’s Order stems from a CFTC Complaint filed on May 11, 2012, that charged the Defendants with the fraudulent solicitation of clients to subscribe to the Boomer and Victory Trading Systems, which were used by clients to trade E-mini Standard and Poor’s 500 Stock Index futures contracts in managed accounts (see CFTC Press Release 6266-12 and Complaint).
The Order, entered on January 22, 2014, requires Defendants CTI Group and Cooper Trading to pay $10.175 million in disgorgement and a $10 million civil monetary penalty, Symons to pay over $3.150 million in disgorgement and a $4.5 million civil monetary penalty, and Kline to pay over $275,000 in disgorgement and a $1 million civil monetary penalty. The Order further imposes permanent trading and registration bans on the Defendants and prohibits them from violating the anti-fraud and disclosure provisions of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
The CFTC’s Complaint also named as Relief Defendants California companies Snonys, Inc. and Dragonfyre Magick Incorporated, which, according to the Complaint, were owned or operated by Symons and Kline, respectively. The Order provides for the disgorgement of Relief Defendants’ funds frozen pursuant to a court order that was previously entered on May 14, 2012.
The Order further finds that, since at least in or around August 2009, CTI and its agents and employees made false and misleading statements and omitted material information when soliciting clients to purchase subscriptions to CTI’s Trading Systems, including (1) how long CTI had been in business, (2) CTI’s experience developing and marketing Trading Systems, (3) the identities and professional experience of CTI’s personnel (who used fictitious names when communicating with clients), (4) the track record of CTI’s Trading Systems, (5) the past profitability of CTI’s Trading Systems, (6) the transaction costs associated with trading via CTI’s Trading Systems, and (7) the risks associated with trading futures contracts via CTI’s Trading Systems.
CTI’s salespeople, including Kline, made false statements to clients and prospective clients about CTI’s purported money-back guarantee, and Symons and Kline are liable for all of CTI’s violations because they controlled CTI and actively participated in CTI’s unlawful conduct, according to the Order.
According to the Order, funds were transferred to the Relief Defendants from CTI as a result of the Defendants’ violations of the CEA and CFTC regulations, and the Relief Defendants do not have a legitimate claim to or interest in those funds.
The CFTC thanks the National Futures Association for its assistance.
CFTC Division of Enforcement staff members responsible for this case are R. Stephen Painter, Jr., Michael C. McLaughlin, David W. MacGregor, Lenel Hickson, Jr., and Manal M. Sultan.
CFTC Fraud Awareness Advisories & Customer Protection Information
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including an Advisory covering Commodity Trading Systems Sold on the Internet. This Advisory states that the CFTC has seen an increase in websites that fraudulently promote commodity trading systems and advisory services and provides information designed to help customers identify this potential swindle before they invest.
Customers can file a tip or complaint to report suspicious activities or other information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or an online form.
Last Updated: January 24, 2014