CFTC charges Texas firm with soliciting USD30m to trade commodity futures
The US Commodity Futures Trading Commission has charged Robert Mihailovich, Sr., and Growth Capital Management, both of Rockwall, Texas, with fraudulent solicitation in connection with the trading of commodity futures contracts and leveraged foreign currency.
Mihailovich, Sr., is a felon who was on supervised release while he was soliciting for and operating Growth Capital Management.
The CFTC’s complaint also charges that Growth Capital Management, a registered commodity trading adviser and a commodity pool operator, and Robert Mihailovich, Jr., also of Rockwall and the listed principal and registered associated person of Growth Capital Management, made false statements in required regulatory filings with the CFTC by failing to disclose that his father, Mihailovich, Sr., was a controlling principal of Growth Capital Management.
The CFTC’s complaint alleges that, since at least June 2008, Growth Capital Management and Mihailovich, Sr., fraudulently solicited and accepted more than USD30m from approximately 93 customers to invest in futures and forex through discretionary accounts traded by Growth Capital Management.
To induce new investors, Mihailovich, Sr., made false representations claiming to be a successful commodity futures trader and touting Growth Capital Management as having a profitable trading record. According to the complaint, Mihailovich, Sr., stated that he never experienced a losing trade. However, actual trading accounts managed and controlled by Mihailovich, Sr., realised net losses.
Mihailovich, Sr., also failed to disclose to customers that he had a federal felony conviction for mail fraud, was ordered to pay approximately USD197,000 in restitution, served 27 months in prison and was on a three-year supervised release.
In its continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans and a permanent injunction prohibiting further violations of the federal commodities laws.
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