This is a photo of the National Register of Historic Places listing with reference number 7000063
Tuesday, January 31, 2012
SEC CHARGES TWO BROTHERS WITH NAKED SHORT SELLING
The following excerpt is from a Securities and Exchange Commission e-mail:
"Washington, D.C., Jan. 31, 2012 – The Securities and Exchange Commission today charged two brothers living in Chicago and New York with naked short selling for failing to locate and deliver shares involved in short sales to broker-dealers.
Short sellers sell borrowed shares in hopes of profiting from declining prices. While short selling is legal, SEC rules require short sellers to locate shares to borrow before selling them short, and they must deliver the borrowed securities by a specified date. Market makers are excepted from the locate requirement when selling short in connection with bona-fide market making activities in the security for which the exception is claimed. Naked short selling occurs without having borrowed the securities to make delivery.
According to the SEC’s order instituting administrative proceedings against Jeffrey A. Wolfson and Robert A. Wolfson, they generated more than $17 million in ill-gotten gains from naked short selling transactions involving such stocks as Chipotle Mexican Grill Inc., Fairfax Financial Holdings Ltd., Novastar Financial Inc., and NYSE Group. As Jeffrey Wolfson stated in a recorded telephone conversation, “What I sell them is not guaranteed, it never gets delivered, it’s funny paper.”
The SEC’s Division of Enforcement alleges that Jeffrey Wolfson engaged in illegal naked short sales while working as a broker-dealer himself and later as the principal trader at a Chicago-based broker-dealer that is no longer in business. He also taught his brother and others how to do it. Robert Wolfson conducted illegal naked short sales while trading through an account at New York-based broker-dealer Golden Anchor Trading II LLC, which also has been charged in the SEC’s enforcement action. The firm has changed its name to Barabino Trading LLC.
“By engaging in naked short selling, the Wolfsons had a major advantage over competitors who complied with the law and incurred the costs associated with actually borrowing the securities,” said George S. Canellos, Director of the SEC’s New York Regional Office. “The SEC is committed to recovering substantial ill-gotten proceeds made by traders who seek to circumvent important short selling regulations.”
According to the SEC’s order, the Wolfsons engaged in two types of transactions from July 2006 to July 2007 in violation of Regulation SHO. The first type of transaction – a “reverse conversion” or “reversal” – involves selling stock short and simultaneously selling a put option and buying a call option on the stock. The Wolfsons did not locate the stock before the sale, nor did they deliver the shares when sold or make a bona fide purchase of the stock when required to close out their resulting fail-to-deliver position. They were not entitled to the market maker exception to Regulation SHO because the short sales were not made in connection with bona-fide market making activities.
The SEC's order states that the second type of transaction was a stock and option combination that created the illusion that the party subject to a close-out obligation had satisfied that obligation by buying the same kind and quantity of securities it had sold short. However, the stock was always sold back either the next day or within several days, and the Wolfsons knew or had reason to know that the shares ostensibly purchased in these sham transactions would never be delivered because they were purchased from another naked short seller who did not have the stock either. The Wolfsons entered into a significant number of these sham "reset" transactions with each other and also took the other side of the "reset" trades done by each other as well those done by other market participants.
The SEC's Division of Enforcement alleges that by engaging in the misconduct described in the order, Jeffrey Wolfson willfully violated and willfully aided and abetted and caused BMR's violations of Rule 203(b)(1) of Regulation SHO, and willfully violated and willfully aided and abetted and caused others' violations of Rule 203(b)(3) of Regulation SHO. It further alleges that Golden Anchor willfully violated, and Robert Wolfson willfully aided and abetted and caused Golden Anchor's violations of Rules 203(b)(1) and 203(b)(3) of Regulation SHO. The administrative proceedings will determine what relief, if any, is in the public interest against Jeffrey Wolfson, Robert Wolfson and Golden Anchor, including disgorgement of ill-gotten gains, prejudgment interest, financial penalties, a censure or a suspension or bar from association with any broker-dealer.
The SEC’s investigation was conducted by Steven Rawlings, Peter Altenbach, Daniel Marcus and Layla Mayer and the litigation effort will be led by Kevin McGrath. They work in the New York Regional Office. The SEC’s investigation into violations of Regulation SHO is continuing.
The SEC acknowledges the assistance of the Chicago Board Options Exchange and the Financial Industry Regulatory Authority in this matter."
SEC ALLEGES A $14,380,000 PROMISSORY NOTE FRAUD
The following excerpt is from the SEC website:
January 30, 2012
"The Securities and Exchange Commission announced today that on January 25, 2012 U.S. District Judge Ruben Castillo entered judgments against Arthur Lin (“Lin”) and his wife, Relief Defendant Gloria Lin. The SEC’s complaint, filed in the U.S. District Court for the Northern District of Illinois, alleges that from at least September 2006 through at least January 2009, Defendants Marcin Malarz (“Malarz”), Jacek Sienkiewicz (“Sienkiewicz”), and Lin raised at least $14,380,000 from at least 43 investors through the fraudulent unregistered offer and sale of promissory notes issued by entities owned and controlled by Malarz and/or Sienkiewicz. Malarz Equity Investments, LLC (“Malarz Equity”) was the primary entity through which the scheme was perpetrated. Gloria Lin was a member of Malarz Equity, and Lin was an officer of Malarz Equity. The complaint alleges, among other things, that investors were told that their funds would be used to purchase apartment complexes and rehabilitate and convert the individual apartment units for sale as condominiums. The complaint alleges that contrary to these representations, Malarz used substantial sums of the Malarz Equity investors’ funds for his personal benefit and to make ponzi-type “interest” and principal payments to previous investors. Further, Lin received at least $436,000 in undisclosed commission payments, which were transmitted to Relief Defendant Gloria Lin.
To resolve the Commission’s charges, without admitting or denying the allegations of the complaint, Lin consented to the entry of a judgment permanently enjoining him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordering disgorgement of $436,000 and prejudgment interest of $49,583, but waiving payment of all but $158,240 in disgorgement and prejudgment interest and not imposing a civil penalty, based upon Lin’s representations in his sworn statement of financial condition dated August 16, 2011. Without admitting or denying the allegations of the complaint, Gloria Lin consented to the entry of a judgment ordering her jointly and severally liable for the disgorgement amount owed by Lin. The Lins are required to pay $43,500 within 14 days of the entry of the final judgments and the remaining $114,740 within 1 year of the date of entry of the final judgments plus post-judgment interest thereon.”
.
January 30, 2012
"The Securities and Exchange Commission announced today that on January 25, 2012 U.S. District Judge Ruben Castillo entered judgments against Arthur Lin (“Lin”) and his wife, Relief Defendant Gloria Lin. The SEC’s complaint, filed in the U.S. District Court for the Northern District of Illinois, alleges that from at least September 2006 through at least January 2009, Defendants Marcin Malarz (“Malarz”), Jacek Sienkiewicz (“Sienkiewicz”), and Lin raised at least $14,380,000 from at least 43 investors through the fraudulent unregistered offer and sale of promissory notes issued by entities owned and controlled by Malarz and/or Sienkiewicz. Malarz Equity Investments, LLC (“Malarz Equity”) was the primary entity through which the scheme was perpetrated. Gloria Lin was a member of Malarz Equity, and Lin was an officer of Malarz Equity. The complaint alleges, among other things, that investors were told that their funds would be used to purchase apartment complexes and rehabilitate and convert the individual apartment units for sale as condominiums. The complaint alleges that contrary to these representations, Malarz used substantial sums of the Malarz Equity investors’ funds for his personal benefit and to make ponzi-type “interest” and principal payments to previous investors. Further, Lin received at least $436,000 in undisclosed commission payments, which were transmitted to Relief Defendant Gloria Lin.
To resolve the Commission’s charges, without admitting or denying the allegations of the complaint, Lin consented to the entry of a judgment permanently enjoining him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordering disgorgement of $436,000 and prejudgment interest of $49,583, but waiving payment of all but $158,240 in disgorgement and prejudgment interest and not imposing a civil penalty, based upon Lin’s representations in his sworn statement of financial condition dated August 16, 2011. Without admitting or denying the allegations of the complaint, Gloria Lin consented to the entry of a judgment ordering her jointly and severally liable for the disgorgement amount owed by Lin. The Lins are required to pay $43,500 within 14 days of the entry of the final judgments and the remaining $114,740 within 1 year of the date of entry of the final judgments plus post-judgment interest thereon.”
.
DIRECTOR OF THE SEC’S DIVISION OF ENFORCEMENT ROBERT KHUZAMI SPEAKS
Remarks at SEC and Department of Justice joint news conference.
The following excerpt is from the SEC website:
January 27, 2012
“Good morning. Mortgage products were in many ways ground zero in the financial crisis.
Individual mortgages were pooled and sliced and diced into sophisticated securities that were a world away from the house, on a street, in a town somewhere in America where a family had realized their dream – the dream of buying a house they could call a home.
A few invested directly in these sophisticated securitized mortgage products, called Residential Mortgage Backed Securities (RMBS).
Many more had exposure to the performance of these investments, even if they did not own them directly, or had the performance of their other investments tied to these products.
Regardless of how they were connected to these products, many shared the belief that these investments were safe and secure, the right investment to protect their financial security, fund their retirement, and pay for their kids' education.
That turned out to be terribly wrong. These mortgage products suffered unprecedented losses, and the pain and loss that followed is known all too well.
The job of the SEC and my fellow law enforcement colleagues is to hold accountable those persons, those institutions who lied, who cheated and who misled investors in the sale of these products.
Every failure does not mean that the law was broken, but all of us are committed to identifying the violations that did occur and prosecuting them.
That is why I am so pleased to help lead the RMBS Working Group.
Now each of us here today may have different jurisdiction or different expertise but one thing unites us: a drive to do what it takes to make sure that our efforts leave no stone unturned, no dark corner unexposed to the light.
At the SEC, we have been incredibly busy in the pursuit of financial crisis cases.
We have focused on misconduct by those at the highest corporate levels and by institutions with the greatest involvement in the products, transactions and practices that gave rise to the financial crisis.
So far, we have filed actions against nearly 90 such individuals and entities involving public companies that failed to disclose the increasing risks in their mortgage businesses such as Countrywide, New Century, and IndyMac; against funds and investment advisers that made misleading disclosures when offering funds holding mortgage and other financial products such as Morgan Keegan, State Street Bank and Trust, Charles Schwab and Reserve Fund; against top executives at Fannie Mae and Freddie Mac for failing to accurately disclose subprime exposure; and against banks making misleading disclosures about subprime exposure and the structure of even more complex mortgage products called CDOs such as Goldman Sachs, JPMorganChase and Wachovia.
In these actions, we have named approximately 45 CEOs, CFOs and other senior corporate officers.
The SEC’s expertise and experience in mortgage products will be greatly enhanced by our participation in the RMBS Working Group.
We have a long history of successful collaboration with our law enforcement colleagues, including the Department of Justice, FBI, U.S. Attorney Offices, State Attorney’s General, and other authorities around the country. Many of us are on the phone with each other weekly, if not daily, moving our investigations forward.
And through the leadership of the Financial Fraud Enforcement Task Force, which we have co-chaired since its creation in November 2009, we have strengthened these ties – sharing knowledge and leveraging skills and resources in a way that helps all of us to hold violators accountable.
Today’s announcement is another positive step in this direction.
The Working Group will enhance coordination, efficiencies and the sharing of expertise. It will ensure that we pool the different capabilities, resources, legal theories and remedies that each of us bring to the effort.
Information sharing and collaboration among the widest group of partners, including the State Attorneys General that are part of the Working Group, is in everyone’s interest.
To be clear, investigations into RMBS offerings have been ongoing at the SEC. Along with experts across the agency, we have a specialized unit dedicated to the effort.
We already have issued scores of subpoenas, analyzed more than approximately 25 million pages of documents, dozens and dozens of witnesses, and worked with our industry experts to analyze the terms of these deals and the accuracy of the disclosures made to investors.
We are looking for evidence that a firm failed to disclose important information when selling these securities – for example, misleading disclosures about the credit quality, conformity with underwriting guidelines, underlying property valuations, and delinquency and defects of mortgages in the RMBS pools.
These efforts will be greatly aided by the contributions from my fellow Working Group members.
Thank you.”
The following excerpt is from the SEC website:
January 27, 2012
“Good morning. Mortgage products were in many ways ground zero in the financial crisis.
Individual mortgages were pooled and sliced and diced into sophisticated securities that were a world away from the house, on a street, in a town somewhere in America where a family had realized their dream – the dream of buying a house they could call a home.
A few invested directly in these sophisticated securitized mortgage products, called Residential Mortgage Backed Securities (RMBS).
Many more had exposure to the performance of these investments, even if they did not own them directly, or had the performance of their other investments tied to these products.
Regardless of how they were connected to these products, many shared the belief that these investments were safe and secure, the right investment to protect their financial security, fund their retirement, and pay for their kids' education.
That turned out to be terribly wrong. These mortgage products suffered unprecedented losses, and the pain and loss that followed is known all too well.
The job of the SEC and my fellow law enforcement colleagues is to hold accountable those persons, those institutions who lied, who cheated and who misled investors in the sale of these products.
Every failure does not mean that the law was broken, but all of us are committed to identifying the violations that did occur and prosecuting them.
That is why I am so pleased to help lead the RMBS Working Group.
Now each of us here today may have different jurisdiction or different expertise but one thing unites us: a drive to do what it takes to make sure that our efforts leave no stone unturned, no dark corner unexposed to the light.
At the SEC, we have been incredibly busy in the pursuit of financial crisis cases.
We have focused on misconduct by those at the highest corporate levels and by institutions with the greatest involvement in the products, transactions and practices that gave rise to the financial crisis.
So far, we have filed actions against nearly 90 such individuals and entities involving public companies that failed to disclose the increasing risks in their mortgage businesses such as Countrywide, New Century, and IndyMac; against funds and investment advisers that made misleading disclosures when offering funds holding mortgage and other financial products such as Morgan Keegan, State Street Bank and Trust, Charles Schwab and Reserve Fund; against top executives at Fannie Mae and Freddie Mac for failing to accurately disclose subprime exposure; and against banks making misleading disclosures about subprime exposure and the structure of even more complex mortgage products called CDOs such as Goldman Sachs, JPMorganChase and Wachovia.
In these actions, we have named approximately 45 CEOs, CFOs and other senior corporate officers.
The SEC’s expertise and experience in mortgage products will be greatly enhanced by our participation in the RMBS Working Group.
We have a long history of successful collaboration with our law enforcement colleagues, including the Department of Justice, FBI, U.S. Attorney Offices, State Attorney’s General, and other authorities around the country. Many of us are on the phone with each other weekly, if not daily, moving our investigations forward.
And through the leadership of the Financial Fraud Enforcement Task Force, which we have co-chaired since its creation in November 2009, we have strengthened these ties – sharing knowledge and leveraging skills and resources in a way that helps all of us to hold violators accountable.
Today’s announcement is another positive step in this direction.
The Working Group will enhance coordination, efficiencies and the sharing of expertise. It will ensure that we pool the different capabilities, resources, legal theories and remedies that each of us bring to the effort.
Information sharing and collaboration among the widest group of partners, including the State Attorneys General that are part of the Working Group, is in everyone’s interest.
To be clear, investigations into RMBS offerings have been ongoing at the SEC. Along with experts across the agency, we have a specialized unit dedicated to the effort.
We already have issued scores of subpoenas, analyzed more than approximately 25 million pages of documents, dozens and dozens of witnesses, and worked with our industry experts to analyze the terms of these deals and the accuracy of the disclosures made to investors.
We are looking for evidence that a firm failed to disclose important information when selling these securities – for example, misleading disclosures about the credit quality, conformity with underwriting guidelines, underlying property valuations, and delinquency and defects of mortgages in the RMBS pools.
These efforts will be greatly aided by the contributions from my fellow Working Group members.
Thank you.”
Monday, January 30, 2012
FOUR FORMER EXECS. AT MANUFACTURING COMPANY CHARGED WITH ACCOUNTING FRAUD BY SEC
The following excerpt is from the SEC website:
01/30/2012 03:18 PM EST
“Washington, D.C., Jan. 30, 2012 – The Securities and Exchange Commission today charged four former senior executives and accountants at the British subsidiary of an Indiana-based manufacturer of medical devices and aerospace products for their roles in an accounting fraud that was so pervasive that it distorted the financial statements of the parent company.
The SEC also reached settlements with the company’s former CEO and current CFO, who were not involved or aware of the scheme at the subsidiary, to recover bonus compensation and stock profits they received while the fraud was occurring and inflating company profits.
The SEC alleges that vice president for European operations Richard J. Senior, finance director Matthew Bell, controller Lynne Norman, and management accountant Shaun P. Whiteley orchestrated and carried out the fraud at Thornton Precision Components (TPC), which is the Sheffield, England-based subsidiary of NYSE-listed Symmetry Medical Inc. The accounting scheme involved the systematic understatement of expenses and overstatement of assets and revenues at TPC, and materially distorted Symmetry’s financial statements for a three-year period.
The four executives and accountants, as well as Symmetry in a separate administrative proceeding, agreed to settle the SEC’s charges, and the subsidiary’s two outside auditors formerly of Ernest & Young LLP UK agreed to suspensions for their deficient audits.
“The accounting fraud orchestrated by TPC executives had a ripple effect right up to the financials of the parent company. Symmetry shareholders were investing their money – and Symmetry and TPC executives were collecting their bonuses – based in part on inflated numbers,” said Stephen Cohen, Associate Director of the SEC’s Division of Enforcement. “We also found significant failures by two outside auditors, which helped this fraud to continue undetected. Accountants who practice before the SEC, including those who audit foreign subsidiaries of U.S. registrants, need to make sure their audits conform to U.S. auditing standards or they won’t be allowed to practice before the SEC.”
According to the SEC’s complaint filed in federal court in South Bend, Ind., Symmetry’s annual financial statements for 2005 and 2006 as well as other reporting periods were materially misstated as a result of misconduct in the reporting of TPC’s financials. Senior, Bell and Norman made false certifications as to the accuracy of the financial information reported to Symmetry by TPC, and lied to TPC’s outside auditors. Meanwhile, Senior and Bell each received bonuses and sold Symmetry stock at prices they knew or recklessly disregarded were fraudulently inflated by the accounting fraud taking place at TPC.
In a separate complaint also filed in the same federal court, the SEC is seeking reimbursement for bonuses and other incentive-based and equity-based compensation received by Symmetry’s former CEO Brian S. Moore under Section 304 of the Sarbanes-Oxley Act. Under the settlement, subject to court approval, Moore agreed to reimburse $450,000 to Symmetry.
The SEC also instituted separate settled administrative proceedings against Symmetry and its CFO Fred L. Hite. The SEC finds that Hite failed to provide an internal audit status report concerning TPC to Symmetry’s Audit Committee in July 2006. Although the internal audit status report had not uncovered the fraud at TPC, it did raise the potential for deeper problems there. Hite also failed to reimburse Symmetry for bonuses, other compensation, and Symmetry stock-sale proceeds he received while the fraud occurred at the subsidiary (as required by SOX Section 304). Hite agreed to pay a $25,000 penalty and reimburse $185,000 to Symmetry. For its part, Symmetry agreed to a cease-and-desist order against future financial reporting, books-and-records and internal controls violations.
The SEC separately instituted and settled administrative proceedings against two associate chartered accountants in the United Kingdom – Christopher J. Kelly and Margaret Hebb née Whyte – who were the former audit partner and audit manager on Ernest & Young LLP UK’s audits of TPC for its 2004 to 2006 fiscal years (in the case of Kelly) and its 2005 and 2006 fiscal years (in the case of Hebb). The SEC’s order finds that Kelly and Hebb engaged in improper professional conduct by, among other things, failing to properly audit TPC’s accounts receivable balances and inventory. The order suspends both Kelly and Hebb from appearing or practicing before the SEC as accountants, with the opportunity to seek reinstatement after two years.
The SEC acknowledges the assistance of the United Kingdom’s Financial Services Authority in this matter.”
01/30/2012 03:18 PM EST
“Washington, D.C., Jan. 30, 2012 – The Securities and Exchange Commission today charged four former senior executives and accountants at the British subsidiary of an Indiana-based manufacturer of medical devices and aerospace products for their roles in an accounting fraud that was so pervasive that it distorted the financial statements of the parent company.
The SEC also reached settlements with the company’s former CEO and current CFO, who were not involved or aware of the scheme at the subsidiary, to recover bonus compensation and stock profits they received while the fraud was occurring and inflating company profits.
The SEC alleges that vice president for European operations Richard J. Senior, finance director Matthew Bell, controller Lynne Norman, and management accountant Shaun P. Whiteley orchestrated and carried out the fraud at Thornton Precision Components (TPC), which is the Sheffield, England-based subsidiary of NYSE-listed Symmetry Medical Inc. The accounting scheme involved the systematic understatement of expenses and overstatement of assets and revenues at TPC, and materially distorted Symmetry’s financial statements for a three-year period.
The four executives and accountants, as well as Symmetry in a separate administrative proceeding, agreed to settle the SEC’s charges, and the subsidiary’s two outside auditors formerly of Ernest & Young LLP UK agreed to suspensions for their deficient audits.
“The accounting fraud orchestrated by TPC executives had a ripple effect right up to the financials of the parent company. Symmetry shareholders were investing their money – and Symmetry and TPC executives were collecting their bonuses – based in part on inflated numbers,” said Stephen Cohen, Associate Director of the SEC’s Division of Enforcement. “We also found significant failures by two outside auditors, which helped this fraud to continue undetected. Accountants who practice before the SEC, including those who audit foreign subsidiaries of U.S. registrants, need to make sure their audits conform to U.S. auditing standards or they won’t be allowed to practice before the SEC.”
According to the SEC’s complaint filed in federal court in South Bend, Ind., Symmetry’s annual financial statements for 2005 and 2006 as well as other reporting periods were materially misstated as a result of misconduct in the reporting of TPC’s financials. Senior, Bell and Norman made false certifications as to the accuracy of the financial information reported to Symmetry by TPC, and lied to TPC’s outside auditors. Meanwhile, Senior and Bell each received bonuses and sold Symmetry stock at prices they knew or recklessly disregarded were fraudulently inflated by the accounting fraud taking place at TPC.
In a separate complaint also filed in the same federal court, the SEC is seeking reimbursement for bonuses and other incentive-based and equity-based compensation received by Symmetry’s former CEO Brian S. Moore under Section 304 of the Sarbanes-Oxley Act. Under the settlement, subject to court approval, Moore agreed to reimburse $450,000 to Symmetry.
The SEC also instituted separate settled administrative proceedings against Symmetry and its CFO Fred L. Hite. The SEC finds that Hite failed to provide an internal audit status report concerning TPC to Symmetry’s Audit Committee in July 2006. Although the internal audit status report had not uncovered the fraud at TPC, it did raise the potential for deeper problems there. Hite also failed to reimburse Symmetry for bonuses, other compensation, and Symmetry stock-sale proceeds he received while the fraud occurred at the subsidiary (as required by SOX Section 304). Hite agreed to pay a $25,000 penalty and reimburse $185,000 to Symmetry. For its part, Symmetry agreed to a cease-and-desist order against future financial reporting, books-and-records and internal controls violations.
The SEC separately instituted and settled administrative proceedings against two associate chartered accountants in the United Kingdom – Christopher J. Kelly and Margaret Hebb née Whyte – who were the former audit partner and audit manager on Ernest & Young LLP UK’s audits of TPC for its 2004 to 2006 fiscal years (in the case of Kelly) and its 2005 and 2006 fiscal years (in the case of Hebb). The SEC’s order finds that Kelly and Hebb engaged in improper professional conduct by, among other things, failing to properly audit TPC’s accounts receivable balances and inventory. The order suspends both Kelly and Hebb from appearing or practicing before the SEC as accountants, with the opportunity to seek reinstatement after two years.
The SEC acknowledges the assistance of the United Kingdom’s Financial Services Authority in this matter.”
CFTC FILES AND SETTLES CHARGES AGAINST CENTURION GLOBAL CAPITAL MANAGEMENT LLC
The following excerpt is from the Commodity Futures Trading Commission website:
January 23, 2012
“Washington, DC - The Commodity Futures Trading Commission (CFTC) today announced that it filed and simultaneously settled charges against Timothy Michael Murphy of Redding, Conn., and his New York-based company, Centurion Global Capital Management LLC (CGCM), for fraudulently soliciting at least 40 customers to participate in a commodity pool.
The CFTC’s order requires Murphy and CGCM jointly and severally to pay both a $140,000 civil monetary penalty and restitution of $220,000. The order also permanently prohibits CGCM and prohibits Murphy for a five-year period from trading on a CFTC-registered entity and from registering or seeking exemption from CFTC registration.
The order finds that between about May 2009 and January 2010, CGCM, through Murphy, used a promotional sheet to solicit participants for their commodity pool, Centurion Multi-Strategy LP, that Murphy knew contained false and/or misleading information regarding the trading performance history of one of the two Commodity Trading Advisors that were to trade the pool’s futures accounts. Murphy sent and/or caused this fraudulent promotional sheet to be sent by email and other means to at least 40 pool participants, the order finds. From about September 2009 through July 2010, Murphy received approximately $220,000 from CGCM from the fees and commissions generated by the Centurion pool, according to the order. The Centurion pool was liquidated in or about July 2010, and the remaining funds were returned to pool participants, the order further finds.
The CFTC thanks the National Futures Association (NFA) and the Swiss Financial Market Supervisory Authority (FINMA) for their assistance.
CFTC Division of Enforcement staff members responsible for this case are Joseph Rosenberg, Mark A. Picard, Sheila Marhamati, Philip Rix, Steven I. Ringer, Lenel Hickson, Stephen J. Obie, and Vincent A. McGonagle.”
January 23, 2012
“Washington, DC - The Commodity Futures Trading Commission (CFTC) today announced that it filed and simultaneously settled charges against Timothy Michael Murphy of Redding, Conn., and his New York-based company, Centurion Global Capital Management LLC (CGCM), for fraudulently soliciting at least 40 customers to participate in a commodity pool.
The CFTC’s order requires Murphy and CGCM jointly and severally to pay both a $140,000 civil monetary penalty and restitution of $220,000. The order also permanently prohibits CGCM and prohibits Murphy for a five-year period from trading on a CFTC-registered entity and from registering or seeking exemption from CFTC registration.
The order finds that between about May 2009 and January 2010, CGCM, through Murphy, used a promotional sheet to solicit participants for their commodity pool, Centurion Multi-Strategy LP, that Murphy knew contained false and/or misleading information regarding the trading performance history of one of the two Commodity Trading Advisors that were to trade the pool’s futures accounts. Murphy sent and/or caused this fraudulent promotional sheet to be sent by email and other means to at least 40 pool participants, the order finds. From about September 2009 through July 2010, Murphy received approximately $220,000 from CGCM from the fees and commissions generated by the Centurion pool, according to the order. The Centurion pool was liquidated in or about July 2010, and the remaining funds were returned to pool participants, the order further finds.
The CFTC thanks the National Futures Association (NFA) and the Swiss Financial Market Supervisory Authority (FINMA) for their assistance.
CFTC Division of Enforcement staff members responsible for this case are Joseph Rosenberg, Mark A. Picard, Sheila Marhamati, Philip Rix, Steven I. Ringer, Lenel Hickson, Stephen J. Obie, and Vincent A. McGonagle.”
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