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CFTC obtains USD2.1m judgement against Iowa commodity trader over fraudulent scheme

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Commodity trader Lon Olen Friedrichsen (Friedrichsen) of Alton, Iowa is to pay USD2.1 million to settle a CFTC charges relating to a fraudulent scheme to illegally trade NYMEX West Texas Intermediate Light Sweet Crude Oil futures contracts on behalf of customers.

The court order requires Friedrichsen to pay USD591,570 in restitution and imposes a civil monetary penalty of USD1,500,000. The Order also permanently bans Friedrichsen from the markets the CFTC regulates and permanently enjoins him from future violations of the Commodity Exchange Act and CFTC Regulations, as charged.

The order resulted from a complaint the CFTC filed against Friedrichsen on 2 March, 2018, alleging fraud and registration violations.

Following a hearing on 21 November, 2018, the court determined that from at least 25 June, 2014, through 30 June, 2018, Friedrichsen, without being registered with the CFTC as required, engaged in a fraudulent scheme to obtain access to the futures trading accounts of at least 41 customers in exchange for a 50/50 split of any trading profits he obtained. According to the Order, rather than profitably trade customers’ accounts, Friedrichsen’s trading caused his customers to incur losses of at least USD591,570.

According to the order, Friedrichsen used Craigslist.com and other means to entice customers with misrepresentations about his trading experience and profits. Among other false statements, Friedrichsen represented that he was a CFTC-registered trader who would earn customers 10 percent daily trading profits. As described in the Order, Friedrichsen also “fabricated futures trading reports that falsely reflected highly profitable trading and tens of millions of dollars under [Friedrichsen’s] management.”  In reality, Friedrichsen overstated his trading prowess and “generated excessive losses” in customers’ accounts.

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