For Release: January 16, 2007
California Commodity Trading Firm, Acceleration Capital, Settles Charges of Fraud and Misappropriation Based on Former Agent’s Activity
Washington, D.C.— The U.S. Commodity Futures Trading Commission (CFTC) today announced issuance of an order filing and settling charges of fraud and misappropriation of customer funds against Acceleration Capital, LLC, (Acceleration Capital) of Northridge, California, a registered commodity pool operator and commodity trading advisor. The charges are based on the activities of Toby Wayne Denniston, II, a former agent of Acceleration Capital, who in August 2006 settled identical charges brought by the CFTC (see CFTC Press Release 5211-06, August 8, 2006).
The CFTC order, issued on January 16, 2007, finds that between November 2004 and August 2005, Denniston misappropriated more than $190,000 from Acceleration Mercury Fund 4X LP, a commodity pool located in Northridge, California, for his own use and benefit. Denniston carried out the misappropriation by forging signatures on at least 58 checks. According to the order, 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. Based on the liability of the company for its agents’ activities, the order accordingly finds that Acceleration Capital is liable for Denniston’s misappropriation of funds and false statements to customers in violation of the Commodity Exchange Act.
Acceleration Capital to Pay Restitution and Permanently Surrender Registration with the CFTC
The order directs Acceleration Capital to pay restitution, including pre-judgment interest, of approximately $218,000. The order also revokes Acceleration Capital’s registrations with the CFTC and requires Acceleration Capital 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 order further prohibits for a three-year period Acceleration Capital’s principal, Yuri Plyam, and any entities controlled by him, from acting as a commodity pool operator or associated person of a commodity pool operator, or claiming exemption from registration as a commodity pool operator or associated person of a commodity pool operator.
NFA Settles Related Action
This same day, the National Futures Association (NFA) announced settlement of a related action brought against Yuri Plyam, Castle Trading, Inc. (Castle), a registered introducing broker, and CHP Asset Management LLC (CHP), a registered commodity pool operator. Plyam is also a principal and associated person of Castle and CHP. The NFA’s action settles allegations in a NFA complaint issued April 13, 2006.
The NFA’s order finds recordkeeping and accounting violations, including failure to prepare accurate pool statements, failure to initiate an adequate anti-money laundering program and failure to supervise.
In settling with the NFA, CHP agreed to pay a monetary fine of $30,000; CHP and Acceleration Capital agreed that their NFA memberships shall terminate; Plyam agreed that neither he nor any firm he controls shall operate a commodity pool for a period of three years; and Castle agreed that it shall submit all promotional material to NFA for review and approval prior to its use and that it would maintain a minimum adjusted net capital of at least $100,000 for a period of eighteen months.
The CFTC’s Division of Enforcement 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, Kara Mucha, Joseph F. Vargyas, Michael Solinsky, Gretchen L. Lowe, Vincent A. McGonagle, and Richard B. Wagner.
Last Updated: April 24, 2007