The US Commodity Futures Trading Commission has obtained a federal court order requiring Blue Sky Capital Management and its principal, Gregory M Schneider, jointly and severally to pay a USD140,000 civil monetary penalty for making false statements to representatives of the National Futures Association (NFA).
Schneider currently resides in Bellville, Ohio, and Blue Sky maintained a business address in Lebanon, Tennessee.
The consent order of permanent injunction, entered on 28 August 2012 by Judge John T Nixon of the US District Court for the Middle District of Tennessee, stems from a CFTC complaint filed on 8 August 2011. The complaint charged Blue Sky and Schneider with making false, fictitious, or fraudulent statements to the NFA and wilfully concealing material facts from the NFA in connection with an NFA audit in 2008 of Blue Sky. Blue Sky at the time was a CFTC-registered commodity pool operator and commodity trading advisor.
The order finds that during the NFA audit of Blue Sky, Blue Sky and Schneider misrepresented to the NFA that Blue Sky began managing customer accounts in 2008, managed 10 customer accounts with an aggregate equity of approximately USD20,000, and had received no customer complaints.
The order further finds that Blue Sky and Schneider failed to disclose that, in 2007, Blue Sky managed approximately 80 customer accounts with an aggregate equity of approximately USD1.2m, and that a Blue Sky customer complained about the unauthorised trading of his account before, and even during, the NFA audit.
The order also imposes permanent trading and registration bans against the defendants and permanently prohibits them from further violations of the Commodity Exchange Act, as charged.