The US Commodity Futures Trading Commission has filed a notice of intent to revoke the registrations of Brian Kim and Liquid Capital Management (LCM).
LCM is a registered commodity pool operator and commodity trading advisor.
Kim is registered as an associated person of LCM and is the sole principal of LCM.
The notice, filed on 24 July 2012, alleges that Kim and LCM are subject to statutory disqualification from CFTC registration based on a default judgment and permanent injunction entered by the US District Court for the Southern District of New York on 15 April 2011.
That injunction prohibits the defendants from committing further fraud, among other violations. Additionally, the default judgment includes findings that Kim fraudulently misappropriated at least USD2m of pool participant funds, fraudulently solicited prospective pool participants, and made material false statements to pool participants.
In the default judgment order, Kim and LCM were held liable for fraud in connection with operating a Ponzi scheme. The court also ordered that Kim and LCM pay USD3,129,161 in restitution to victims of the fraud and a USD9,387,483 civil monetary penalty.
The registration revocation action is further based on Kim’s and LCM’s multiple felony convictions in state criminal actions arising out of the operation of the Ponzi scheme and a federal criminal action against Kim for making a false statement in a passport application.
Kim and LCM each entered guilty pleas in connection with the various criminal charges against them. Kim was sentenced to federal and state prison terms totalling more than 16 years.