CFTC fine of $2.5 Million


7 February, AtoZForex.com, Lagos – The U.S. Commodity Futures Trading Commission (CFTC) has announced a ruling of permanent injunction against Worth Group Inc. of Jupiter Florida (Worth of Jupiter) and its owner and operator Andrew Wilshire and Eugenia Mildner. The order mandates the three defendants; Worth Groups Inc., Andrew Wilshire and Eugenia Mildner to immediately comply with the law governing their financed precious metals transactions and to restitute a sum of $1,250,000. The Defendants were also required to pay a CFTC fine of $1,250,000 as civil monetary penalty.

Worth Group connection to previous violations

Worth Group, is owned by Andrew Wilshire, and his sister Eugenia is Worth Group’s sole officer and director. Wilshire previously ran a Wilshire Investment Management Corporation, which was found liable for violations of The Commodity Exchange Act and Regulations and for failure to supervise employees. His registration as an Associated Person for Commission Registrant Firms was withdrawn in March 2007 by the commission.

On August 13, 2013, the CFTC filed a complaint that charged Worth Group Inc., Wilshire and Eugenia with defrauding retail precious metal customers and engaging in illegal off-exchange retail commodity transactions. The complaint states that Worth sells physical precious metals to individual retail customers on both financed and on fully paid basis.

Regulatory failures

On Financed basis customers pay a portion of the purchase price and finance the remainder through loans from Worth. Under the Dudd-Frank Wall Street Reform And Consumer Protection Act of 2010, financed precious metals transactions must be conducted on an exchange, unless the entity offering the transactions (in this case Worth) can establish that actual delivery of physical metals results within 28 days. The complaint charged the Defendants with “engaging in illegal and fraudulent off-exchange transactions, in that worth failed to timely deliver precious metals for a significant percentage of financed transactions, yet charged interest and storage fees when no metal had been purchased.”

On a fully paid basis, customers pay the full purchase price for precious metals, which gives Worth the obligation to deliver precious metals to its customers within 28 days. The complaint charged that Worth falsely represented that it would purchase and store precious metals, when in fact Worth engaged in Spot Forward Contracts with third parties, leading to the CFTC fine.

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