For Release: April 14, 2008
Florida-Based E-Metal Merchants, Inc. and Two Officers Ordered to Pay More Than $10 Million in Restitution and Penalties in Illegal Off-Exchange Metal Options Case
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) announced today that it obtained more than $10 million in restitution and penalties in a consent order that resolves an illegal off-exchange metal options action against E-Metal Merchants, Inc. (E-Metal Merchants), a Florida corporation, and two of its corporate officers, Benji Dayan, of Miami, Florida, and Andrew Stern, of North Miami, Florida.
The consent order arises from a CFTC lawsuit filed on June 13, 2005 (see CFTC Press Release 5089-05, June 23, 2005), which alleged that, since at least May 2004, E-Metal Merchants purchased and sold illegal off-exchange metal options in violation of the Commodity Exchange Act (CEA) and CFTC regulations.
Specifically, the consent order entered on April 11, 2008, by the Honorable Joan A. Lenard of the U.S. District Court for the Southern District of Florida, requires defendants to pay $8,042,021 in restitution and the following civil monetary penalties: E-Metal Merchants, $1 million; Dayan, $800,000; and Stern, $200,000.
The consent order also permanently bars E-Metal Merchants from any commodity-related activity, and permanently bars Dayan and Stern from engaging in any commodity trading on behalf of others on any exchange or soliciting or accepting any funds from others for any on-exchange commodity trading. Furthermore, all defendants are permanently enjoined from applying for registration, engaging in any activity requiring registration, or acting as a principal, agent, or any other officer or employee of any registered entity or person required to be registered.
According to the consent order, more than 200 members of the general public provided more than $8.4 million to E-Metal Merchants to purchase and sell off-exchange gold and silver metal option contracts, which were illegal, with less than $400,000 ever being returned to these customers. The consent order further provides that Dayan and Stern, as controlling persons of E-Metal Merchants, are liable for the firm’s violations of the CEA and CFTC regulations.
The following CFTC Division of Enforcement staff members are responsible for this case: Charles D. Marvine, Lacey Dingman, Richard Glaser, and Richard Wagner.
Last Updated: April 14, 2008