Release Number 8919-24

CFTC Charges Unregistered Commodity Pool Operator and Its Owner with Futures Fraud and Misappropriation

June 06, 2024

Washington, D.C. —  The Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Western District of Tennessee against Three Bridges Trading Fund, LLC, a Tennessee corporation, and its owner, president, and manager, Donald Wray Rodgers of Collierville, Tennessee. The complaint alleges the defendants operated a fraudulent scheme in which they solicited and accepted at least $2 million from pool participants to invest in a commodity pool.

The defendants, however, misappropriated much of the funds, attempted to conceal their fraudulent scheme by issuing false account and trading statements to pool participants, and misappropriated funds by paying some pool participants using funds from other pool participants, in the manner of a Ponzi scheme.

In its continuing litigation against the defendants, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

Case Background

As alleged in the complaint, from approximately January 2022 to November 2022, Rodgers fraudulently solicited customers by representing Three Bridges was a successful commodity pool and by making misrepresentations about his past trading history. According to the defendants’ records, they solicited and received at least $2 million from approximately 50 pool participants to trade futures contracts on their behalf.

As further alleged in the complaint, the defendants also commingled pool funds with non-pool assets and directed pool participants to send money to Rodgers’ personal account. Bank account records show Rodgers transferred money, including pool funds, from Three Bridges’ bank account to his personal trading account, where he placed trades in his own name. Additionally, Rodgers failed to receive all pool participants' funds in the name of Three Bridges and failed to operate Three Bridges as a legal entity separate from himself.

As alleged in the complaint, when trading profits failed to materialize, the defendants attempted to conceal their fraudulent scheme by issuing false account documents to pool participants, including creating false account statements to convince pool participants that the fund remained solvent, and later, creating false trade confirmations to wrongfully explain Three Bridges’ loss of pool participants’ funds.

As further alleged in the complaint, Three Bridges and Rodgers acted as a commodity pool operator (CPO) by soliciting, accepting, and receiving funds to trade in commodity futures, but Three Bridges failed to register with the CFTC as a CPO, as required. Additionally, Rodgers, as an agent of Three Bridges, acted as an Associated Person (AP) of the CPO, but failed to register with the CFTC as an AP, as required.

The Division of Enforcement staff responsible for this case are Nicole Buseman, Alben Weinstein, K. Brent Tomer, Lenel Hickson, Jr., and Manal M. Sultan.

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CFTC’s Fraud Advisories

The CFTC has issued several customer protection Fraud Advisories and Articles including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools.

The CFTC also 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 entity. A company’s registration status can be found using NFA BASIC.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online or contact the Whistleblower Office.  Whistleblowers may be eligible to receive between 10 and 30 percent of the monetary sanctions collected, paid from the Customer Protection Fund, which is financed through monetary sanctions paid to the CFTC by violators of the CEA.