Federal
regulators have filed charges against two Louisiana companies and their founder
for allegedly orchestrating a multi-million dollar Forex (FX) trading fraud
that targeted dozens of investors.
CFTC Alleges $7.6 Million
Forex Trading Scheme
The
Commodity Futures Trading Commission (CFTC) filed a civil
enforcement action against NOLA FX Capital Management, LLC, Meteor, LLC, and
their founder Michael B. DePetrillo in the US District Court for the Eastern
District of Louisiana. The regulator alleges the defendants reportedly operated
an elaborate scheme that defrauded at least 40 individuals out of approximately
$7.6 million.
According
to the CFTC’s complaint, DePetrillo and his companies allegedly ran an
unregistered commodity pool operation from July 2017 until present, promising
investors their money would be used for foreign currency trading through an
entity called NOLA FX Fund, LLC.
“The
defendants allegedly sent false account statements to pool participants showing
purported profits and trading activity, when in fact none existed,” CFTC
commented. “Instead of trading as promised, the defendants misappropriated pool
funds. The defendants used these misappropriated funds to make payments to
existing pool participants in a manner akin to a Ponzi scheme , pay DePetrillo’s
personal expenses and to conduct personal trading in DePetrillo’s personal
trading accounts.”
.@CFTC Charges two Louisiana-Based Companies and Cofounder with Multi-Million Dollar Forex Fraud, Failing to Register: https://t.co/4BekMWnh8B
— CFTC (@CFTC) October 28, 2024
The case
has also caught the attention of criminal authorities, with the US Attorney’s
Office for the Eastern District of Louisiana filing parallel criminal charges
against DePetrillo.
Recent CFTC Actions
In August,
the CFTC fined NinjaTrader Clearing, LLC (NTC) $983,425 for inadequate
oversight of employee conduct in handling accounts linked to a fraud case. The
Illinois-based firm, a futures commission merchant, failed to act promptly on a
statutory restraining order that mandated freezing or restricting the affected
accounts.
Additionally,
two months ago, the CFTC imposed a $22 million fine on Nasdaq Futures, Inc. for
regulatory violations related to its Designated Market Maker (DMM) program,
which ran from July 2015 to July 2018 and incentivized energy futures contract
trades.
In the meantime,
the conflict between US regulators and cryptocurrency firms has intensified,
with nearly $32 billion collected in settlements since 2019, according to
CoinGecko. The CFTC has spearheaded many of these efforts, with its most
notable action targeting the defunct crypto exchange FTX and its affiliate,
Alameda. In August 2024, nearly two years after FTX’s collapse, the CFTC
announced a $12.7 billion penalty settlement against these companies.
Federal
regulators have filed charges against two Louisiana companies and their founder
for allegedly orchestrating a multi-million dollar Forex (FX) trading fraud
that targeted dozens of investors.
CFTC Alleges $7.6 Million
Forex Trading Scheme
The
Commodity Futures Trading Commission (CFTC) filed a civil
enforcement action against NOLA FX Capital Management, LLC, Meteor, LLC, and
their founder Michael B. DePetrillo in the US District Court for the Eastern
District of Louisiana. The regulator alleges the defendants reportedly operated
an elaborate scheme that defrauded at least 40 individuals out of approximately
$7.6 million.
According
to the CFTC’s complaint, DePetrillo and his companies allegedly ran an
unregistered commodity pool operation from July 2017 until present, promising
investors their money would be used for foreign currency trading through an
entity called NOLA FX Fund, LLC.
“The
defendants allegedly sent false account statements to pool participants showing
purported profits and trading activity, when in fact none existed,” CFTC
commented. “Instead of trading as promised, the defendants misappropriated pool
funds. The defendants used these misappropriated funds to make payments to
existing pool participants in a manner akin to a Ponzi scheme , pay DePetrillo’s
personal expenses and to conduct personal trading in DePetrillo’s personal
trading accounts.”
.@CFTC Charges two Louisiana-Based Companies and Cofounder with Multi-Million Dollar Forex Fraud, Failing to Register: https://t.co/4BekMWnh8B
— CFTC (@CFTC) October 28, 2024
The case
has also caught the attention of criminal authorities, with the US Attorney’s
Office for the Eastern District of Louisiana filing parallel criminal charges
against DePetrillo.
Recent CFTC Actions
In August,
the CFTC fined NinjaTrader Clearing, LLC (NTC) $983,425 for inadequate
oversight of employee conduct in handling accounts linked to a fraud case. The
Illinois-based firm, a futures commission merchant, failed to act promptly on a
statutory restraining order that mandated freezing or restricting the affected
accounts.
Additionally,
two months ago, the CFTC imposed a $22 million fine on Nasdaq Futures, Inc. for
regulatory violations related to its Designated Market Maker (DMM) program,
which ran from July 2015 to July 2018 and incentivized energy futures contract
trades.
In the meantime,
the conflict between US regulators and cryptocurrency firms has intensified,
with nearly $32 billion collected in settlements since 2019, according to
CoinGecko. The CFTC has spearheaded many of these efforts, with its most
notable action targeting the defunct crypto exchange FTX and its affiliate,
Alameda. In August 2024, nearly two years after FTX’s collapse, the CFTC
announced a $12.7 billion penalty settlement against these companies.
This post is originally published on FINANCEMAGNATES.
