The US Commodity Futures Trading Commission has announced that James J.
The US Commodity Futures Trading Commission has announced that James J. Zhou and his company, Jade Trader, formerly of Alhambra, California, will pay USD127,000 restitution and a USD50,000 civil penalty in an anti-fraud enforcement action.
On June 11, the US District Court for the Central District of California entered a consent order settling the CFTC’s charges against the defendants, which stemmed from a complaint filed on October 1, 2004.
The consent order finds that between October 2002 and October 2004, Zhou and Jade Trader fraudulently solicited members of the general public through an internet site to place funds under management with Jade Trader for trading in commodity futures contracts using systems including the Jade Trader Day Trade System.
According to the order, the web site contained falsified trading results that gave the appearance of profitable trading as well as false representations regarding how accounts would be traded and the risks inherent in commodity futures trading.
For example, the defendants claimed on the website that Jade Trader DTS returned a profit of USD63,975 for one E-mini contract traded in 2003, when in fact client accounts for that period indicated total losses of USD127,135.96. While the site promised that Jade Trader would trade the customers’ accounts ‘two to about 12 times per day,’ actual trading in one client account reflected 89 trades in one day.
The order also permanently bans Zhou and Jade Trader from any commodity-related activity and from engaging in any commodity trading on behalf of others on any exchange or soliciting or accepting any funds from others for any on-exchange commodity trading.
The order also permanently enjoins them from applying for registration, engaging in any activity requiring registration or claiming exemption from registration with the CFTC, or acting as a principal, agent, or any other officer or employee of any registered entity or person required to be registered.
