Release Number 8279-20

CFTC Charges Wisconsin Firm and its Manager with Registration, Disclosure, and Recordkeeping Violations

October 07, 2020

Washington, D.C. — The Commodity Futures Trading Commission announced the filing of a civil enforcement action in the U.S. District Court for the Eastern District of Wisconsin against Southwest Services, L.L.C. a/k/a South West Services, LLC and its sole managing member, Timothy A. Sack of Oshkosh, Wisconsin.

The complaint charges Southwest Services with failing to register with the CFTC as a retail foreign exchange dealer (RFED), failing to provide customers with a written risk disclosure statement, and failing to keep books and records as required. The complaint also charges Sack with failing to register with the CFTC as an associated person of a RFED. In addition, the complaint alleges that Sack, as controlling person of Southwest Services, is liable for the firm's violations of the Commodity Exchange Act and CFTC regulations.  

Case Background

The complaint alleges that from at least August 2016 through April 2018, Southwest Services offered to enter into, and in fact entered into, agreements, contracts, or transactions in financed retail foreign currency derivatives (forex) with customers located in the United States who were not eligible contract participants. Additionally, these agreements, contracts, or transactions did not result in the delivery of forex within two days of the transaction date. Southwest Services was or offered to be the counterparty to these retail forex transactions. The defendants, through their website, YouTube videos, and in-person solicitations, offered to enter into, and entered into, such transactions in Vietnamese Dong, Iraqi Dinar, and other foreign currencies. As the sole managing member of Southwest Services, and the sole person responsible for its creation and operation, Sack was responsible for the content of the website both individually and as the agent of Southwest Services.

Moreover, the complaint alleges that Southwest Services failed to provide necessary written risk disclosure statements every time it opened an account for a customer who engaged in retail forex transactions. The complaint also alleges that Southwest Services failed to keep and maintain RFED-required books and records for every retail forex transaction.  

The CFTC strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that company. A company’s registration status can be found using NFA BASIC.

The Division of Enforcement staff members responsible for this case are Timothy J. Mulreany, Kassra Goudarzi, George Malas, Hillary Van Tassel, and Paul G. Hayeck.