The has been in the news again as the US securities regulator hits an Alabama resident and his associated company with $755,000 fine for operating a fraudulent trading scheme.
Today, the CFTC has obtained a permanent injunction from the U.S. District Court for the Northern District of Alabama against Aaron B. Butler and his company, Negus Capital Incorporated (NCI), both of Alabama. NCI and its owner were charged earlier in November 2019 with fraudulent solicitation, misappropriation, and registration violations in connection with .
On regulatory grounds, Butler was sued for mistreating the investors deposits, totaling between $500 and $5,000. He claimed pooling those funds into a single trading account, and that he, acting as the trader for NCI, would use them to trade binary options on the customers’ behalf.
Rather than trade, Butler misappropriated most, if not all, funds for his own personal expenses, including jewelry, purchases at an electronics store, and retail gift cards.
The CFTC compliant shows that the fraud scheme had been going on since at least March 2017 through February 2018, and involved fraudulent ad campaigns that ultimately defrauded 70 victims out of $305,000.
In its continuing litigation against NCI, the CFTC is aiming for further civil monetary penalties, restitution, and permanent bans on registration and trading against the defendants.
CFTC continues cleanup of the trading space
Today’s action is the latest in the US crackdown on binary options operatives after a series of cases uncovered massive fraud in the shady industry.
The CFTC has been also active recently in its cleanup of the forex space with charges of fraud being brought against a dozen of brokers and trading apps. Just last week, the agency has filed its case against and its COO, asserting that David Wayne Mayer was only interested in running a fraudulent scheme.
The users of their auto-trading app were given false account histories showing trading returns that didn’t exist, and provided false information about executives’ experience and expertise in trading, the watchdog said.
In yet another case, the CFTC also a $250,000 civil penalty for illegally signing up US investors to its FX trading platform. The London-based arm of the largest retail FX broker in the United States was also ordered to disgorge $241,671 as one of its agents referred US clients despite never having been registered with the commission.