For Release: February 21, 2008
CFTC Settles Introducing Broker Fraudulent Solicitation Lawsuit with Florida-Based FCM Guarantors National Commodities Corporation, Inc., and International Commodity Clearing LLC
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) announced today that it settled charges against registered Futures Commission Merchants (FCMs) National Commodities Corporation, Inc. (NCCI) and International Commodity Clearing, LLC (ICC), both of Fort Lauderdale, Florida.
The consent order stems from a CFTC complaint filed on September 26, 2005 (see CFTC Press Release 5125-05) in the U.S. District Court for the Northern District of Georgia charging Introducing Broker (IB) American Derivatives Corp. (ADC) and related parties with fraudulently inducing customers to purchase commodity futures option contracts and failing to supervise employees. The complaint further charged NCCI and ICC with liability for ADC’s alleged violations.
IBs may enter into guarantee agreements with registered FCMs. Such agreements may be relied upon to meet the CFTC’s alternative adjusted net capital requirement for IBs. As alleged, NCCI and ICC both entered into separate guarantee agreements with ADC by which NCCI and ICC guaranteed and agreed to be jointly and severally liable for “all obligations” of ADC stemming from the solicitation of, and transactions involving, customer accounts during their respective periods as guarantors. As a result, the complaint charged them with liability in their capacity as ADC’s guarantors. The CFTC complaint seeks a return of funds to allegedly defrauded customers and disgorgement of ill-gotten gains.
The consent order against NCCI and ICC requires that, if a court orders ADC to pay restitution of customer losses and/or disgorgement of profits in this case, then NCCI and ICC shall each be jointly and severally liable for that portion of ADC’s restitution and/or disgorgement obligation attributable to the period of time during which each FCM’s guarantee agreement was in effect. The case is still pending against ADC and the other defendants.
The following CFTC staff members are responsible for this case: Daniel C. Jordan, Kathleen Banar, Rick Glaser, and Richard Wagner.
Last Updated: February 21, 2008