September 12, 2019
CFTC Orders Chief Compliance Officer of Trading Firm to Pay $150,000 for Fraud and False Statements to a Self-Regulatory Organization
Washington, DC – The U.S Commodity Futures Trading Commission today issued an order filing and settling charges against CFTC registrant Rafael Marconato of Limeira, São Paulo, Brazil, requiring him to pay $125,000 in restitution and a $25,000 civil penalty for engaging in acts that operated as a fraud on pool participants and making false statements to the National Futures Association (NFA).
In addition to paying restitution and a civil monetary penalty, the order permanently prohibits Marconato from trading commodity interests for himself or others, soliciting or accepting funds from others for the purpose of trading commodity interests, and from registering with the CFTC. The order also requires Marconato’s cooperation in the CFTC’s ongoing litigation against other parties. The amount of the civil monetary penalty recognizes Marconato’s substantial cooperation with the CFTC Division of Enforcement.
“The CFTC expects registrants to take their duties seriously and will take action against those who engage in fraud or make false statements,” said CFTC Director of Enforcement James McDonald. “The reach of our enforcement efforts does not stop at our borders — we will root out fraud and misconduct in our markets no matter where it originates. I want to thank our U.S. and international law enforcement partners for their assistance in this matter.”
Marconato was a registered associated person and Chief Compliance Officer of a registered commodity pool operator and commodity trading advisor (the firm) who solicited clients to invest in commodity pools and managed accounts operated and offered by the firm. According to the order, the firm and its Chief Executive Officer (CEO) misappropriated client funds, and the CEO lied to the NFA in order to conceal the fraud. In May 2019, the CFTC filed a civil enforcement action in the U.S. District Court for the Southern District of New York against the CEO and the firm. [See Press Release 7927-19]
The order finds that Marconato also made false statements to the NFA by denying the existence of that commodity pool and instead representing that the firm had no customers. The order further finds that Marconato told the NFA that the commodity pool he had been soliciting for was a company that invested in software, and sent the NFA a false document repeating that claim, even though he knew the company was a commodity pool formed to trade commodity interests.
As also set out in the order, Marconato sold part of his interest in the firm’s commodity pool to an existing pool participant for $125,000 without disclosing that he was selling part of his own interest.
The CFTC appreciates the assistance of the NFA, the Money Laundering and Transnational Criminal Enterprises Unit of the United States Attorney’s Office for the Southern District of New York, the New York Division of the Federal Bureau of Investigation, and the Comissão de Valores Mobiliários of Brazil.
CFTC Division of Enforcement staff members responsible for this action are Elizabeth M. Streit, Joy McCormack, and Scott R. Williamson.
CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories providing the warning signs of fraud, including the Commodity Pool Fraud Advisory, which puts a spotlight on a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools.
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.