For Release: October 3, 2008
Jacksonville Resident Stephanie Ann Gallitano and Her Fort Lauderdale-Based Companies Ordered to Pay More than $5 Million in Restitution and Civil Monetary Penalties in CFTC Forex Anti-Fraud Action
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that Stephanie Ann Gallitano of Jacksonville, Florida, and her Fort Lauderdale-based companies, Financial Risk International, Inc. (FRI) and Financial Risk Management, Inc. (FRM), were ordered to pay restitution of $3.1 million and a civil monetary penalty of $1,943,000 to settle CFTC charges of fraudulently soliciting customers to purchase foreign currency (forex) options. (See CFTC Press Release 5270-07, January 4, 2007.)
The federal district court’s order, entered on October 1, 2008, by the Honorable Joan A. Lenard of the U.S. District Court for the Southern District of Florida, also permanently prohibits Gallitano and her companies from engaging in any commodity-related trading activities.
The court’s order finds that since at least March 2004 and continuing through April 2006, FRI and Gallitano fraudulently solicited more than 250 members of the public to open retail forex options trading accounts. Additionally, the order finds that to induce new customers to trade, FRI employees and Gallitano cold-called prospective customers and knowingly or recklessly misrepresented the risks and rewards of trading forex options. Specifically, they also did not disclose material facts concerning the likelihood of profiting from forex trading and that more than 98 percent of FRI’s customers sustained large trading losses.
FRI and Gallitano misrepresented the likelihood of profits to customers. For example, Gallitano touted a trading “spread” strategy that purportedly made money no matter which way the market moved. Gallitano told customers that the risk of loss associated with trading forex options could be limited or made virtually non-existent using the strategy.
The following CFTC Division of Enforcement staff members are responsible for this matter: Matthew Elkan, Lacey Dingman, Kathleen Banar, Rick Glaser, and Richard Wagner.
Last Updated: October 3, 2008