Release Number 8343-20
Wisconsin Court Enters $740,968 Judgement Against Company and its Principal for Registration, Disclosure, and Recordkeeping Violations
December 22, 2020
Washington, D.C. — The Commodity Futures Trading Commission announced the U.S. District Court for the Eastern District of Wisconsin entered permanent trading and registration bans and a $740,968 civil monetary penalty 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 court’s action follows the CFTC’s filing of a civil enforcement action against the defendants in October 2020. [See CFTC Press Release No. 8279-20]
The order finds that Southwest Services failed to register with the CFTC as a retail foreign exchange dealer (RFED), failed to provide customers with a written risk disclosure statement, and failed to keep books and records, as required. The order also finds that Sack failed to register with the CFTC as an associated person of a RFED. In addition, the order finds that Sack, as controlling person of Southwest Services, is liable for Southwest Services’ violations of the Commodity Exchange Act and CFTC regulations.
Specifically, the order finds that from at least August 2016 through at least April 2018, Southwest Services offered to enter into and/or entered into agreements, contracts, or transactions in financed retail foreign currency (forex) with customers located in the United States who were not eligible contract participants and that 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/or 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 order finds that Southwest Services failed to provide required written risk disclosure statements when opening accounts for retail forex customers. The order also finds 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.