COMMODITY POOL OPERATOR ORDERED TO PAY OVER $470,000 TO SETTLE FRAUD CHARGES

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 
CFTC Orders David R. Lynch to Pay More than $470,000 in Restitution and a Civil Monetary Penalty to Settle Charges of Fraudulent Misappropriation, Fraudulent Solicitations, and False Statements

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it entered an Order requiring David R. Lynch of Stuart, Florida, to make restitution of $171,297 to defrauded customers and pay a $300,000 civil monetary penalty, among other sanctions, for fraudulent misappropriation, fraudulent solicitations, and false statements in connection with a commodity pool trading leveraged or margined off-exchange foreign currency contracts (forex). Lynch has never been registered with the CFTC.

According to the CFTC’s Order, from about December 2008 through July 4, 2013, Lynch operated a commodity pool and fraudulently solicited at least $348,450 from at least 14 pool participants. Lynch falsely told pool participants that he had earned as much as 7 percent per month trading forex, that they could never lose their principal, and that they could get their funds back at any time. However, Lynch deposited only a portion of his pool participants’ funds in forex trading accounts and the trading he did was unprofitable, the Order finds.

The CFTC’s Order also finds that Lynch misappropriated over $126,000 of his pool participants’ funds by using part of those funds to pay his personal expenses and the remainder to pay false profits or purported returns of capital to some pool participants in the manner of a Ponzi scheme. Further, to conceal his trading losses and misappropriations, Lynch issued monthly account statements to pool participants that falsely showed that pool participants were earning consistent profits.

In addition to ordering restitution to be made and imposing a civil monetary penalty, the CFTC Order also requires Lynch to cease and desist from further violations of the Commodity Exchange Act and a CFTC regulation, as charged, and imposes permanent bans on trading, registration, and certain other commodity related activities.

CFTC Division of Enforcement staff members responsible for this case are Glenn I. Chernigoff, Alison B. Wilson, Kara L. Mucha, and Gretchen L. Lowe.

SEC FILES SUBPOENA ENFORCEMENT ACTION IN PRE-IPO SOLICITATIONS CASE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

SEC Files Subpoena Enforcement Action Against Anthony Coronati for Failure to Produce Documents and Appear for Testimony in Investigation of Solicitations Relating to Pre-Ipo Securities

The Securities and Exchange Commission announced today that it has filed a subpoena enforcement action in the U.S. District Court for the Southern District of New York against Anthony Coronati and that the Court entered an order directing Coronati to show cause why he should not be ordered to comply with the subpoenas. According to the application, the SEC is investigating whether Coronati and others have violated or are violating registration, anti-fraud, or other provisions of the federal securities laws in connection with a business known as Bidtoask.com.

The SEC's application alleges that Bidtoask.com, apparently created by Coronati, solicits investments relating to the securities of sought-after private companies that investors hope will soon hold initial public offerings, such as Facebook Inc., Twitter Inc., and Dropbox Inc. The nature and extent of investors' interests once they purchase these purported pre-IPO shares is part of the investigation. The application further alleges that certain investor funds have been commingled with other funds in an account controlled by Coronati and that personal expenses appear to have been paid out of that account. The SEC staff is investigating whether any investor funds have been misappropriated or otherwise misused.

As part of its investigation, the staff in the SEC's New York Regional office served Coronati with a document subpoena in July 2013, and served a further subpoena for documents and sworn testimony in early October 2013. The SEC's application alleges that Coronati has ignored the subpoenas: he never produced any documents, appeared for testimony, or otherwise responded to the subpoenas.

The SEC's application seeks an order from the federal district court compelling Coronati to comply fully with the subpoenas. The SEC is continuing its fact-finding investigation and, to date, has not concluded that anyone has violated the securities laws.