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The US Commodity Futures Trading Commission has filed a federal lawsuit against Diego Mariano Rolando of Buenos Aires, Argentina, trading as IA Trading.com, who is accused of defrauding hundreds of customers worldwide through a USD43.8m investment scheme.
'While the continuing growth of the internet and electronic communications systems expand investment opportunities for customers around the globe, it also means new opportunities for unscrupulous crooks to try to take advantage of investors,' says the CFTC's director of enforcement, Gregory Mocek.
'The filing of this case should send notice to the villains of cyberspace that they cannot hide behind a monitor in a virtual world. The investigations that go on in the real world are conducted with the protection of the entire global investing community in mind.'
The CFTC's enforcement action alleges that Rolando fraudulently traded customer funds in commodity futures and options contracts, provided false account statements to customers, and supplied false customer contact information to a US clearing firm to hide his fraudulent scheme from customers. In all, the complaint alleges that Rolando solicited approximately USD43.8m from more than 400 customers in South America, Europe and the US.
The lawsuit, filed on January 15 in the US District Court for the District of Connecticut, alleges that Rolando utilised the web sites IATrading.com and Roclerman.com to solicit customers to open trading accounts.
He allegedly told customers that he would trade securities on their behalf, but in fact traded tens of millions of dollars in customer funds in commodity futures and options contracts, without customer knowledge or authorisation to trade in the commodity markets. According to the complaint, some customers appear to have signed and completed account documents that limited Rolando's authority to trade securities.
The complaint also charges that to promote his scheme, Rolando provided false customer contact information and false trading advisor names to the US clearing firm holding customers' accounts and clearing trades to circumvent customer protection policies and programmes. Rolando provided false contact information on as many as 200 of the 420 customer accounts, it is alleged.
He is also charged with providing his customers with written materials containing misrepresentations and omissions of material fact regarding their investments and IA Trading.com's role and business relationship with the US clearing firm.
The CFTC is seeking sanctions including a permanent injunction, restitution to defrauded customers, disgorgement of ill-gotten gains and a civil financial penalty. US District Court judge Peter C. Dorsey has issued a restraining order freezing Rolando's assets and all customer accounts traded by Rolando at the US clearing firm. A preliminary injunction hearing has been scheduled for January 24.
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