The CFTC has filed a Notice of Intent to Revoke Registration against Samuel Israel III, formerly of Bayou Management LLC.
The CFTC simultaneously issued an Opinion and Order accepting Israel's settlement offer and revoking his registration as an Associated Person (AP).
The Notice alleged that, pursuant to the Commodity Exchange Act (CEA), Israel was subject to a statutory disqualification of his registration based on the entry of a permanent injunction against him by a federal court. The Notice specifically alleged that on April 3, 2006, the U.S. District Court for the Southern District of New York entered a Partial Consent Order of Permanent Injunction (Consent Order) against Israel in an action brought by the CFTC in September 2005 (See CFTC Press Release 5121-05, September 29, 2005).
The CFTC's complaint in that action alleged that Israel and others committed fraud by: misappropriating customer funds; acquiring funds through false pretenses; engaging in unauthorized trading; and misrepresenting material facts to actual and prospective investors, including the rates of return the hedge fund earned, the value of assets under management, and the existence and identity of the accounting firms that had purportedly audited the commodity pools managed by Bayou Management LLC, of which Israel was an AP and principal.
The CFTC's Order accepting Israel's offer of settlement in the statutory disqualification proceeding finds that Israel is subject to statutory disqualification from registration with the CFTC under Sections 8a(3)(J) and 8a(4) of the CEA. The Opinion and Order revokes Israel's registration as an AP.
The following CFTC Division of Enforcement staff were responsible for this case: Christine Ryall, Eugene Smith, Patricia Gomersall, Paul Hayeck and Joan Manley.