For Release: June 16, 2008
CFTC Obtains Order against California-based James J. Zhou and His Firm, Jade Trader, Requiring Payment of Restitution to Defrauded Customers and Civil Monetary Penalties
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) announced that James J. Zhou and his company, Jade Trader, both formerly of Alhambra, California, will pay $127,135.96 in restitution and a $50,000 civil monetary penalty in an anti-fraud CFTC enforcement action.
On June 11, 2008, the United States District Court for the Central District of California entered a consent order settling the CFTC’s charges against the defendants, which stemmed from a CFTC complaint filed October 1, 2004 (see CFTC Press Release 5008-04, October 13, 2004).
The consent order finds that, from approximately October 11, 2002 to October 5, 2004, Zhou and Jade Trader fraudulently solicited members of the general public through an Internet website www.jadetrader.net to place funds under management with Jade Trader for trading in commodity futures contracts using commodity trading systems including Jade Trader Day Trade System (Jade Trader DTS).
According to the order, the website contained falsified trading results that gave the appearance of profitable trading as well as false representations regarding how accounts would be traded and the risks inherent in commodity futures trading. For example, the defendants claimed on the website that Jade Trader DTS returned a profit of $63,975 for one E-mini contract traded in 2003, when, in fact, actual client accounts for that time frame demonstrated total losses of $127,135.96. Also, although the website represented that Jade Trader DTS would trade the customers’ accounts “2 to about 12 times per day,” the order found that actual trading in one client account reflected 89 trades in one day.
In addition to the monetary penalties, the order permanently bans Zhou and Jade Trader from any commodity-related activity and permanently bars them 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. The order also permanently enjoins them from applying for registration, engaging in any activity requiring registration or claiming exemption from registration with the CFTC, or acting as a principal, agent, or any other officer or employee of any registered entity or person required to be registered.
The following CFTC Division of Enforcement staff are responsible for this case: William Small, Elizabeth Padgett, Lacey Dingman, Rick Glaser, and Richard Wagner.
Last Updated: June 16, 2008