For Release: May 20, 2009
Delaware Resident Kenneth Branch and his company, Cocoon Trade, Inc., Ordered to Pay More than $1.5 Million in Restitution and Penalties in CFTC Commodity Pool Fraud Action
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today the entry of a Consent Order of Permanent Injunction against Kenneth L. Branch (Branch) of New Castle, Delaware and a Default Judgment Order (Default Order) against Cocoon Trade, Inc (Cocoon). The Orders require Branch and Cocoon collectively to pay $632,787 in restitution to defrauded customers and $910,000 in civil penalties. The Orders also permanently prohibit them from engaging in any commodity-related activity, including registering with the CFTC in any capacity.
The Orders settle a CFTC enforcement action filed in the U.S. District Court for Maryland on March 28, 2008 (see CFTC Press Release 5479-08, April 7, 2008).
The Default Order finds that Cocoon, through the acts of Branch, fraudulently solicited at least $1.4 million from at least 46 individuals to invest in commodity futures, either through a commodity pool or individual trading accounts that Branch would manage on their behalf. According to the Default Order, Cocoon, through the acts of Branch, misappropriated at least $941,897 of customer funds to pay purported profits to pool participants and to pay for personal expenses. The Order also finds Cocoon committed registration and regulatory violations in connection with the operation of the commodity futures pool and individual managed trading accounts.
The following CFTC Division of Enforcement staff members are responsible for this case: Kevin S. Webb, Katherine S. Driscoll, Kara Mucha, Michelle Bougas, James H. Holl III, Gretchen L. Lowe and Vincent McGonagle.
The Commission appreciates the cooperation of the Securities Division of the Maryland Attorney General's Office in investigating this matter.
Last Updated: May 20, 2009