On Tuesday, the U.S. Commodity Futures Trading Commission (CFTC), the independent agency that regulates futures and options markets, announced that it is suing in California district court Jody Dupont and his company for fraud and failing to register with the CFTC.
The U.S. derivatives regulator says that Jody Dupont of South Carolina, and his company, Open Range Trading LLC fraudulently solicited victims to purchase a commodity futures day-trading system, called the Open Range Trading System, raking in a total of $92,000 by misrepresenting the software’s effectiveness. Defendants sold the ‘double your money’ software for as little as $250 per month to receive the basic trading signals and as much as $25,000 to receive the trading signals and other personalized trading advice.
In connection with the promotion of the software, Open Range and its principal Jody Dupont made a series of materially false claims through various means, including a website, social media, newsletters and verbal communications. Specifically, the claims to bolster the credibility of their system included that the system, out of 37 months, earned $700 to over $13,000 monthly in 30 months, while in fact it never had a trading account to make these purported profits, the Complaint charges.
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In addition to false representations, the commission contends that Dupont personally claimed he has experience for over two decades in actual trading and investing in futures when in fact he was not.
Furthermore, the defendants didn’t provide on the Open Range website the disclosures required by CFTC Regulation 4.41(b), which plainly states, “the results are based on simulated or hypothetical performance results that have certain inherent limitations.”
The allegations against Open Range and Mr. Dupont highlight regulators’ concerns about the risks posed by commodity trading systems sold on the internet, including the potential to undermine market integrity. According to the watchdog, it has seen an increase in websites that fraudulently promote commodity trading systems and advisory services.
In addition to the fiscal penalties, including full restitution to defrauded investors, the commission seeks “permanent registration and trading bans, and a permanent injunction against future violations of federal commodities laws,” as charged.