The US Commodity Futures Trading Commission (CFTC) has filed and simultaneously settled charges against Howard Winell, Winell Associates, Inc and Maxie Partners GP over unauthorised trading and misappropriating funds in connection with operating a commodity futures and options pool.
The CFTC order requires the respondents jointly and severally to pay restitution of USD3,740,277.37 and a USD1.5 million civil monetary penalty. The order also imposes permanent trading bans on the respondents (with a limited exception) and permanently bans them from CFTC registration having found that commencing in 2005, the respondents solicited and pooled approximately USD20 million from approximately 25 pool participants to trade commodity futures and options on commodity futures through a commodity pool named Maxie Partners LP.
In May 2007, one of the pool’s largest participants made a request to redeem its approximately USD7 million. According to the order, the respondents segregated the USD7 million to meet the participant’s redemption request, but, before making the redemption, the pool sustained significant losses and had margin calls of approximately USD4 million issued by Futures Commission Merchants holding the pool’s trading accounts. The order further finds that to meet the margin calls and continue trading, Winell transferred approximately USD7 million, the participant’s segregated funds, back to the pool’s trading accounts. Through the margin calls and trading, the respondents lost approximately USD3.8 million of the participant’s funds. The order concludes that the respondents misappropriated a pool participant’s funds and engaged in unauthorised trading.
