For Release: August 8, 2006
U.S. Commodity Futures Trading Commission Files and Settles Charges of Fraud and Misappropriation against Former Employee of California Commodity Trading Firm Castle Trading Inc.
Toby Wayne Denniston, II, of Alta Loma, California, Agrees to Pay Restitution of Approximately $209,000 and a $250,000 Civil Penalty
Washington, D.C.— The U.S. Commodity Futures Trading Commission (CFTC) today announced the issuance of an order filing and simultaneously settling charges of fraud and misappropriation of customer funds against Alta Loma, California, resident Toby Wayne Denniston, II, a former employee of Castle Trading Inc., a registered introducing broker. Denniston has never been registered with the Commission in any capacity.
The CFTC order, entered on August 7, 2006, finds that, between November 2004 and August 2005, Denniston misappropriated over $190,000 from Acceleration Mercury Fund 4X LP, a commodity pool located in Northridge, California, for his own use and benefit. Denniston accomplished the misappropriation by forging signatures on at least 58 checks. Denniston used the pool participants’ funds to pay for personal items, such as a BMW automobile, vacations, and electronic equipment. To conceal his misappropriation, Denniston regularly altered the pool’s bank and trading account statements and created false account statements to be sent to pool participants. The order accordingly finds that Denniston misappropriated funds and issued false statements to customers in violation of the Commodity Exchange Act.
The order, among other things, directs Denniston to pay a $250,000 civil penalty and to make restitution (including pre-judgment interest) of approximately $209,000. The order also permanently prohibits Denniston from trading on, or subject to, a registered entity and requires Denniston to comply with certain undertakings, including never seeking registration or claiming exemption from registration with the CFTC or acting as a principal, officer, or employee of any person registered, required to be registered or exempt from registration.
The Division appreciates the assistance of the National Futures Association in the filing of this matter.
The following Division of Enforcement staff were responsible for this case: Lacey Dingman, Theodore Joseph Dowd, II, Joseph Vargyas, Michael Solinsky, Gretchen L. Lowe, and Richard Wagner.
Last Updated: July 26, 2007