Forex traders charged with fraud The CFTC announced that Susan Davis, David Howard II, Joseph Burgos, and their three forex trading firms (Forex Capital Trading Group, Forex Capital Trading Partners, and Highland Stone Capital Management) have been charged with fraud. The defendants have been implicated in a foreign exchange ("forex") solicitation scam. A judge has frozen their assets and prohibited the destruction of their books and records. According to the complaint, Davis, Howard, and Burgos and their companies began soliciting funds to be traded in off-exchange retail forex contracts in April 2009. They told prospective investors, via their website and other media, that they had extensive experience and garnered incredible profits, created false account statements to demonstrate Highland Stone's impeccable past performance record, and lied about their own trading and managerial expertise. In this manner, they were able to obtain $1.3 million from at least 73 different customers to trade forex. Once in possession of customer funds, the CFTC alleges that the defendants traded unwisely, causing the forex account funds to sustain catastrophic losses. Forex Group and Forex Partners alone lost $224,824 in 2009. Altogether, the three firms lost $736,241 through October 2010. However, the defendants reported gains of over 50% in 2010, and provided customers with account statements showing these profits. Not only did these profits never materialize, participants lost 86% of invested principle. The CFTC is seeking restitution, rescission of contracts, disgorgement of ill-gotten gains, civil monetary penalties, and trading and registration bans. Read more about this CFTC enforcement action. photo credit: epSos.de CFTC LAW – Forex, Futures, and Commodities News and Analysis. Press release, rule summaries, and enforcement actions from the CFTC, NFA, SEC, FSA, and other agencies from around the world.
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