September 4, 2013
CFTC Orders Florida Resident Isaac Grossman and His Company, London Metals Market LLC, to Pay over $121,000 in Restitution for Illegal, Off-Exchange Precious Metals Transactions
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Isaac Grossman, a resident of Parkland, Florida, and his company, London Metals Market LLC (London Metals), of Deerfield Beach, Florida, for engaging in illegal, off-exchange precious metals transactions.
The CFTC Order requires Grossman and London Metals to pay $121,665.75 in restitution to their customers. In addition, the Order imposes permanent registration and trading bans on Grossman and London Metals and requires them to cease and desist from violating Section 4(a) of the Commodity Exchange Act.
As explained in the Order, financed transactions in commodities with retail customers, like those engaged in by London Metals, must be executed on or subject to the rules of an exchange approved by the CFTC. The CFTC Order finds that, from September 2012 through February 2013, London Metals solicited retail customers to buy and sell precious metals on a financed basis.
According to the Order, Grossman directly solicited customers and supervised London Metals’ other telemarketers. In making their solicitations, Grossman and the other London Metals telemarketers represented that customers could purchase a desired quantity of precious metals with a 25% deposit, and borrow the remaining 75%, as well as pay a finance charge on the loan, a service charge, a commission, and a mark-up on the spot price of the metal, the Order finds.
If the customer agreed to the transaction, the customer sent the deposit, commission, and mark-up to London Metals, and the funds were ultimately transferred to Hunter Wise Commodities, LLC (Hunter Wise) to be executed, according to the Order. In return, Hunter Wise paid London Metals a portion of the customer commissions and fees, with London Metals ultimately receiving $121,665.75 in commissions and fees for the retail financed precious metals transactions executed through Hunter Wise, the Order finds.
However, according to the Order, neither London Metals nor Hunter Wise bought, sold, loaned, stored, or transferred any physical metals for these transactions, and neither actually delivered any precious metals to any customer. Since London Metals’ transactions were executed off exchange, they were illegal.
The CFTC sued London Metals’ clearing firm, Hunter Wise, in federal court in Florida on December 5, 2012. The CFTC charged Hunter Wise with engaging in illegal, off-exchange precious metals transactions, as well as fraud and other violations (see CFTC Press Release 6447-12). On February 25, 2013, the court granted a preliminary injunction against Hunter Wise, froze the firm’s assets, and appointed a corporate monitor to assume control over those assets (see CFTC Press Release 6522-13).
The CFTC appreciates the assistance of the Florida Office of Financial Regulation.
The CFTC Division of Enforcement staff members responsible for this case are David Chu, Mary Beth Spear, Ava M. Gould, Scott Williamson, Rosemary Hollinger, and Richard B. Wagner.
Last Updated: September 4, 2013