Release Number 7252-15

September 29, 2015

CFTC Orders Florida Resident Alan M. Kneller and His Company American Portfolio Asset Management, Inc. to Pay Restitution and a Civil Monetary Penalty Totaling More than $578,000 in Precious Metals Enforcement Action

Order Also Permanently Bars Respondents from Trading on CFTC-Regulated Markets

Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today filed an Order instituting proceedings and settling charges against Respondents American Portfolio Asset Management, Inc. (APAM), and its owner, Alan M. Kneller, both of Boca Raton, Florida. The CFTC Order charged Kneller and APAM with illegally offering off-exchange financed transactions in precious metals to retail customers and failing to register with the CFTC as a Futures Commission Merchant (FCM), as required.

The CFTC Order requires the Respondents jointly to pay restitution of $478,474 to their customers and a $100,000 civil monetary penalty. The Order also requires the Respondents to cease and desist from further violations of the Commodity Exchange Act, as charged, and prohibits them from trading on or pursuant to the rules of any registered entity.

The Illegal Transactions

Specifically, the CFTC Order finds that, from at least August 2011 through at least February 2013, the Respondents solicited retail customers to buy and sell physical precious metals, such as gold and silver, in off-exchange, leveraged transactions. According to the Order, customers paid a percentage of the purchase price for the metals and received financing for the remainder of the purchase price, while paying commissions and fees on the transactions.

The CFTC Order states that financed, off-exchange transactions with retail customers have been illegal since July 16, 2011, when certain amendments of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 became effective. As explained in the Order, financed transactions in commodities with retail customers like those engaged in by Respondents must be executed on, or subject to, the rules of a board of trade that has been designated by the CFTC as a contract market. Since Respondents’ transactions were done off-exchange, with customers who were not eligible contract participants or eligible commercial entities, they were illegal, the Order finds.

Failure to Register

The Order also states that it is unlawful for any person to act as an FCM, unless such person is registered with the CFTC as an FCM and such registration has not expired or been suspended or revoked. APAM acted as an FCM by soliciting and accepting customers’ orders for financed precious metals transactions and, in connection with those transactions, accepting funds from those customers, including customers who were not eligible contract participants or eligible commercial entities. As such, APAM acted as an unregistered FCM.

The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

CFTC Division of Enforcement staff members responsible for this matter are Karin N. Roth, Christopher Giglio, Douglas K. Yatter, Lenel Hickson, Jr., and Manal M. Sultan.

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CFTC’s Precious Metals Customer Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Precious Metals Fraud Advisory, which alerts customers to precious metals fraud and lists simple ways to spot precious metals scams.

Customers can report suspicious activities or 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 file a tip or complaint online. 

Media Contact
Dennis Holden


Last Updated: September 29, 2015