What is commodity pool fraud? CFTC charges All City Investments

The U.S. Commodity Futures Trading Commission (CFTC) warns investors against the commodity pool fraud, charging All City Investments together with its owner for executing the scam. Why should investors beware of this fraudulent scheme?

23 September, AtoZForex – The U.S. CFTC filed a lawsuit against Jamal Y. Vance and his company, All City Investments LLC, for executing a commodity pool fraud. The scam solicited clients, offering forex and commodity futures transactions.

What is Commodity Pool Fraud? How did the defendants execute it?

Commodity Pool Fraud is a type of a scam performed by unregistered individuals or firms that offer investments in commodity pools. Firms managing the pool often make spurious claims about high profits and low risks in their advertisements. However, in the reality, they misuse investors funds.

According to the complaint of the CFTC, the offender, and its company solicited clients to create an account and deposit money with the Domenica-based broker. Also, the clients were required to sign a limited power of attorney which enabled brokerage to transact in margined FX transactions on their behalf.

Furthermore, the offender used false claims on its website in order to entice investors interested in forex trading. To make the claims trustworthy, the website depicted the graph together with the table and text showing “2,675.10% growth” from December 2013 to September 2015. The advertisements also stated that out of 444 trades executed during that period 442 (99.55%) were Profit Trades and 2 (0.45%) Loss Trades. But all the data reportedly was deceptive. In addition, Jamal Y. Vance and All City Investments are accused of operating as a commodity trading advisor (CTA), or associated person of CTA, without being authorized to do so.

See also: Moody’s: Loss of UK firms EU passporting Exaggerated?

Enforcement by the CFTC

Consequently, the regulator aims to force the wrongdoers to reimburse the losses of victims, pay civil monetary penalty and disgorgement of any ill-gotten gains. CFTC also attempts “permanent registration and trading bans, and a permanent injunction against future violations of federal commodities laws”. Although the regulator seeks the wrongdoers to make the restitutions to victims, it stated that it could no ensure investors if their money would be returned. As the defendants might not have enough of funds or assets to compensate the losses.

Recently, CFTC has been fighting against individuals and firms engaged in the unlawful ‎‎trading and fraudulent activities. The CFTC has published a couple of customer ‎protection Fraud Advisories. The advisories provide the warning signs of ‎fraud, tactics that may be applied by fraudsters, things investors should look at before investing.‎

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