Release:#3921-96 (Civ 95-6221 SD Fla.)
For Release:June 20, 1996
CFTC CHARGES OSTER COMMUNICATIONS INC. d/b/a FUTURE SOURCE WITH COMMITTING FRAUD AND WITH REGISTRATION VIOLATIONS IN CONNECTION WITH SALE AND MARKETING OF JDI LIMITED'S "MICRO-TRADING SYSTEM"
Florida District Court Judge Grants CFTC a Permanent Injunction Against Oster Whereby Oster Agrees to Disgorge at Least $670,000 of Funds Received from Customers Related to the Sale of JDI's Computerized Trading Program
CFTC, Simultaneous with the Civil Settlement, Files Administrative Order
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) and the Florida Attorney General announced today that they filed an amended civil complaint in CFTC vs. JDI Limited Inc. d/b/a Future Vision et al., charging Oster Communications Inc., an Iowa corporation based in Cedar Falls, Iowa, d/b/a Future Source and Future Source Information Systems, Inc. (FSIS), with acting as an unregistered commodity trading advisor (CTA) and violating the anti-fraud provisions of the Commodity Exchange Act (CEA) and CFTC regulations by joining with and aiding and abetting JDI Limited of Fort Lauderdale, Florida, d/b/a Future Vision, in the sale, marketing, and support of JDI's computerized trading program -- the "Micro-Trading System" (MTS).
FSIS is headquartered in Lombard, Illinois, and is a wholly owned subsidiary of Oster Communications Inc. (Oster). FSIS leases computer software systems for trading commodity futures contracts, and supplies traders with electronic access to commodity quotes. Prior to September 1995, Oster conducted these operations through an unincorporated division of the company called Future Source. Oster also publishes the trade journal FUTURES magazine and was registered with the CFTC as a commodity trading advisor (CTA) from June 1982 to June 1990. Neither FSIS nor Future Source has ever been registered with the CFTC.
Simultaneous with the filing of the amended complaint, Oster agreed to settle the action by consenting to an order of permanent injunction, which was entered on June 19, 1996, by the Honorable Jose A. Gonzalez, U.S. District Judge for the Southern District of Florida. The CFTC case against JDI and the individual defendants is still being litigated.
The original complaint, filed in March 1995 (see CFTC News Release 3824-95), charges that JDI and two individual defendants solicited customers to purchase the MTS to trade Swiss franc currency futures without registering as CTAs and that JDI's customers were falsely told that defendants, and others who had purchased the MTS, had made substantial profits using the system, including that customers could expect 80 percent of their commodity trades to be successful, thereby earning daily profits of between $625 and $1,250.
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Specifically, the permanent injunction enjoins Oster and its affiliates and subsidiaries, including FSIS, from violating CEA provisions and CFTC regulations that
1) require persons who provide advice to others regarding the trading of commodity futures contracts to register with the CFTC as CTAs, and 2) prohibit fraud in connection with the dissemination of that advice and the purchase and sale of commodity futures contracts. The court's order also compels Oster to disgorge all funds it received from customers in the JDI complaint to the CFTC and the Florida Attorney General for the benefit of customers, totalling at least $670,000. Oster also is ordered to pay $30,000 in attorneys fees and costs to the Florida Attorney General.
CFTC Administrative Order Finds that Oster, d/b/a Future Source, Was Required to Register as a CTA and Violated the Anti-fraud Provisions of the CEA
In addition to the civil litigation and settlement, the CFTC issued an administrative order against Oster concluding that Oster violated the CEA's anti-fraud provisions and failed to register as a CTA, as required by the CEA. The Commission's order finds that from at least February 1994 to March 1995, Oster effectively joined JDI in the sale, marketing and support of MTS by, among other things:
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supplying JDI with computer hardware and software and commodity quotes at no charge for demonstrations and training;
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distributing MTS promotional material and collecting the names and addresses of prospective customers;
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permitting JDI to retain customer security deposits to defray marketing expenses;
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providing post training support, technical and otherwise, to customers for MTS and Oster's own products; and
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leading customers to believe that both JDI and Oster were engaged in the development and marketing of MTS.
To settle the administrative complaint, Oster, without admitting or denying the charges and the findings, agreed to:
cease and desist from violating the CEA and CFTC regulations charged; and
not to directly or jointly with others provide advice concerning commodity futures and options contracts without being registered with the Commission as a CTA.
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Also Available: full text of the Commission's Action.