October 4, 2016
CFTC Charges Jody Dupont of South Carolina and His Company, Open Range Trading LLC, with Commodity Trading Advisor Fraud
Washington DC - The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action charging Defendants Jody Dupont of Anderson, South Carolina, and his company, Open Range Trading LLC (Open Range), with fraudulently soliciting clients and prospective clients to subscribe to a commodity futures day-trading system, called the Open Range Trading System, and other ancillary trading services that they marketed and sold to clients. Neither DuPont nor Open Range has ever been registered with the CFTC.
Defendants’ Fraud & Violations of CFTC Regulation 4.41(a): False Advertising
The CFTC’s Complaint, filed in the U.S. District Court for the District of South Carolina, alleges that, since at least March 2013 and continuing to the present, Dupont and Open Range solicited clients to purchase the system, which provides buy and sell signals that instruct what commodity futures contracts to trade, when to trade, and at what price. According to the Complaint, the Defendants market the system through various means, including a website, You Tube and other social media, written solicitation materials, a newsletter, and verbal communications that make false and misleading misrepresentations of material fact. The alleged misrepresentations include 1) falsely claiming Dupont had been investing and trading futures for over twenty years, 2) falsely claiming that the system generated large profits with minimal risk, 3) falsely and misleadingly claiming that Defendants were engaging in actual trading when in fact they were not, and 4) failing to disclose that the reported performance results were not based upon actual trading, but rather were simulated or hypothetical.
For example, the Open Range website represented that the Open Range system had profits of between $700 to over $13,000 per month, with 30 of the 37 months shown as profitable, while trading just three contracts at a time; however, the Defendants’ representations were knowingly or recklessly false and misleading because Open Range never had a futures account to make these purported profits, and Dupont had only two futures accounts both of which he traded at a loss, according to the Complaint.
The Defendants allegedly have received approximately $92,000 from Open Range clients, by charging clients anywhere from $250 per month to receive the basic trading signals up to $25,000 to receive the trading signals and other personalized trading advice.
Violations of CFTC Regulation 4.41(b): Failure to Include Hypothetical Disclaimer
Furthermore, in their solicitation materials, Dupont and Open Range never included the hypothetical disclaimer required by CFTC Regulation 4.41(b), which plainly states, “[t]he results are based on simulated or hypothetical performance results that have certain inherent limitations,” the Complaint charges.
In its continuing litigation, the CFTC seeks full restitution to defrauded clients, disgorgement of ill-gotten gains, a civil monetary penalty, permanent registration and trading bans, and a permanent injunction against futures violations of federal commodities laws, as charged.
The CFTC thanks the South Carolina Attorney General’s Office for its assistance in this matter.
CFTC Division of Enforcement staff members responsible for this case are Camille Arnold, Melissa Cavers, David Terrell, Scott Williamson, and Rosemary Hollinger. The CFTC thanks the South Carolina Attorney General’s Office for its assistance in this matter.
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CFTC’s Fraud Advisories: Commodity Trading Systems Sold on the Internet
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Commodity Trading Systems Sold on the Internet Advisory, which states that the CFTC has seen an increase in websites that fraudulently promote commodity trading systems and advisory services.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
Last Updated: October 4, 2016