For Release: February 16, 2007
Federal Court Imposes Penalty and Restitution of More Than $1.3 Million against Manager at Worldwide Commodity Corporation in Commodity Options Fraud Case
Florida-based Defendant Bruce N. Crown Fraudulently Touted High Profits with Low Risk, While His Customers Lost Millions
Washington, D.C.—The U.S. Commodity Futures Trading Commission (CFTC) announced today the entry of a consent order against defendant Bruce N. Crown of Port St. Lucie, Florida. The consent order imposes monetary sanctions of more than $1.3 million against Crown and permanently bars him from any commodity-related activity for his violations of the anti-fraud provisions of the Commodity Exchange Act (CEA) and CFTC's regulations.
The consent order was entered on January 30, 2007, by U.S. District Court Judge Anita B. Brody in the Eastern District of Pennsylvania and stems from a CFTC complaint filed on August 2, 2004 (see CFTC News Release 4971-04, August 13, 2004), and an amended complaint filed on October 28, 2005. The CFTC alleged that Crown and other brokers, while employed at Worldwide Commodity Corporation (Worldwide), a registered Introducing Broker, violated the CEA by misrepresenting facts and omitting pertinent information when soliciting customers to trade commodity options. Crown was a Worldwide manager and salesperson.
The consent order finds that, from January 2003 through August 6, 2005, Crown fraudulently solicited customers using high-pressure sales tactics to open accounts to trade commodity options. The consent order further finds that Crown fraudulently told prospective customers they could expect to make quick and large returns by trading commodity options based upon various well-known world events, including seasonal trends that he claimed would virtually guarantee profits in a short period of time with little risk of loss. However, rather then reap profits, more than 98% of Worldwide’s 341 customers, including 228 handled personally by Crown, suffered total losses in excess of $5 million. In addition, the order finds that Crown’s statements were false and misleading because efficient markets quickly factor publicly known information into the price of contracts and there is substantial risk trading options. (See CFTC Consumer Advisory, Beware of Promises of Easy Profits From Commodity Futures and Options Based Seasonal Demand and Other Well-Known Public Information.)
The consent order also states that Crown acted as a “loader” on Worldwide sales calls. “Loading” refers to the practice of inducing customers to place additional trades immediately after their first trades are made and before they realize the amount of losses sustained on their first trades. In the consent order, Crown admitted that the practice of loading accounts was important so as to get additional funds from customers while they were still “under the ether” -- before they had sustained a big trading loss, received their first account statement, or realized the amount of commissions they were paying on the trades.
In addition to permanently banning Crown from engaging in any commodity-related activity, the order requires that Crown repay customers $645,000 and pay a $705,000 civil monetary penalty.
The CFTC previously settled its charges against Worldwide and the other brokers (see CFTC News Release 5242-06, October 6, 2006). Therefore, this settlement order with Crown concludes the CFTC’s litigation in this matter.
The following CFTC staff members are responsible for this case: Kenneth McCracken, Jeff Le Riche, Jo Mettenburg, Lacey Dingman, Jan Folena, and Richard Glaser.
Last Updated: July 25, 2007