Digital Assets Report


Like this article?

Sign up to our free newsletter

CFTC orders Florida resident and company to pay over USD1m for commodities pool fraud

Related Topics

The Commodity Futures Trading Commission has issued an order simultaneously filing and settling charges against Matthew . White and MW Global Futures LLC (MWGF), both of Florida, for fraudulently soliciting approximately USD1.2 million for a pooled investment vehicle trading commodity futures contracts, misappropriating over USD280,000 in pool participants’ funds to pay for personal expenses, and operating without registration as required. The order requires White and MWGF to pay a USD200,000 civil monetary penalty and USD883,974 in restitution, of which USD602,003 has already been paid. The order also requires White and MWGF to cease and desist from further violations of the Commodity Exchange Act, as charged.

The order finds that from at least February 2014 to July 2018, White and MWGF solicited and received funds from at least six individuals (pool participants) residing in Florida and Washington state, for the purpose of trading commodity futures contracts. White pooled the participants’ funds in his personal bank and trading accounts and deposited only a portion of the pooled funds into commodity interest trading accounts. From 2014 to 2018, White traded pool participants’ funds in two commodity interest accounts, both in his own name. In the first account, there were at least 31 months in which no trading occurred, and the account was closed with a total cumulative loss of USD687. In the second account, opened in April 2018, trading occurred in only one month and ended with a cumulative loss of USD308.
White made false or misleading statements and omitted material facts regarding the profitability of his commodity futures trading to prospective and current pool participants. For example, White failed to disclose that his trading had actually resulted in a net loss and that the highest monthly profit he had earned was roughly USD934. Additionally, White created and delivered monthly account statements to at least two pool participants, which falsely represented that he engaged in trading every month, that his trading was profitable, and that participants were earning positive returns on their deposits.
The order further finds that White misappropriated USD281,970 of pool participants’ funds, diverting most of it for personal expenses, including credit card, auto loan, and rent payments. This amount was far greater than any commissions that White and MWGF could have claimed on the minor, sporadic profits generated by his trading.
Of the approximately USD1.2 million collected from pool participants, MWGF and White initially repaid more than USD400,000, and during the CFTC’s investigation, White repaid an additional USD602,003 to pool participants.
The order also finds that in soliciting and holding funds for a pooled investment vehicle trading commodity futures contracts, White and MWGF illegally operated as unregistered commodity pool operators and White illegally acted as an unregistered associated person of MWGF.
The order recognises White’s cooperation, which expedited the investigation of this matter, in the form of a reduced civil monetary penalty.
In a separate action brought by the US Attorney’s Office for the Western District of Washington, White pleaded guilty to one count of wire fraud in connection with fraudulent solicitation and misappropriation of funds from investors. White is scheduled to be sentenced on 10 April, 2020.
The CFTC appreciates the assistance of the US Attorney’s Office for the Western District of Washington and the Federal Bureau of Investigation.
The Division of Enforcement staff members responsible for this case are Dmitriy Vilenskiy, Julia Colarusso, Christine Ryall, and Paul G Hayeck, as well as former staff member Greta Gao.

Like this article? Sign up to our free newsletter

Most Popular

Further Reading