September 21, 2012
CFTC Obtains Default Judgment and Permanent Injunction Order against ProfitStars Intl, Corp. and Ulysis Starling for Engaging in a Business that Operated as a Deceit and Violating a Regulatory Disclosure Requirement
Defendants ordered to pay $280,000 in civil monetary penalties and permanently barred from any commodity-related activities
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Paul A. Engelmayer of the U.S. District Court for the Southern District of New York entered a default judgment and permanent injunction order against ProfitStars Intl, Corp. (ProfitStars) and its president, Ulysis K. Starling, both of Dallas, Texas.
The court’s order, entered on September 17, 2012, finds that ProfitStars and Starling engaged in a transaction, practice, or course of business that operated as a fraud or deceit by failing to disclose to participants of a foreign currency (forex) pooled investment vehicle that 1) ProfitStars had opened and operated a forex pool account in its own name, rather than in the name of a legally required separate pool entity, as required by law, 2) pool funds were being used to trade opposite an entity, Paragon FX Enterprises, LLC, which had been acting as a retail foreign exchange dealer (RFED) without being registered as an RFED, in violation of the Commodity Exchange Act (CEA) and a CFTC regulation, and 3) ProfitStars was not entitled to a disclosure exemption it was claiming.
The order also finds ProfitStars liable for failing to notify the National Futures Association (NFA) that its claimed disclosure exemption was not valid, as required by a CFTC regulation. The order finds Starling liable for ProfitStars’ violations as a controlling person.
The judgment arises from a CFTC complaint filed in the U.S. District Court for the Southern District of New York on October 31, 2011 charging ProfitStars, a Texas corporation, and its president, Starling, with anti-fraud violations (see CFTC Press Release 6141-11, November 16, 2011).
The court’s order permanently bars ProfitStars and Starling from engaging in the unlawful conduct charged in the CFTC complaint. The order also requires defendants to pay $280,000 in civil monetary penalties and permanently bars them from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from CFTC registration.
This CFTC action was one of three related cases the CFTC filed on October 31, 2011 to enforce new forex regulations that became effective October 18, 2010. These new regulations require entities that wish to participate in the retail forex market to register with the CFTC and to comply with regulations intended to protect the public.
The CFTC thanks the NFA for its significant assistance.
CFTC staff members responsible for this case are Peter Haas, Danielle Karst, Kyong Koh, Jessica Harris, Paul Hayeck, and Joan Manley.
Last Updated: September 21, 2012