Although not direct part of the $3 million binary options fraud, Westward International Ltd. (Westward) and Coucarin Holdings Ltd. (Coucarin), have come under the US regulator’s hammer and are now required to pay nearly $2 million.
Today, the CFTC has announced that it obtained a federal court order requiring Westward and Coucarin to disgorge ill-gotten client funds since they did not provide any legitimate services nor had any legitimate entitlement or interest to the client funds, the agency said.
The order stemmed from a CFTC enforcement anti-fraud action filed against Vision Financial Partners and Neil Pecker back on March 2017. The order imposes a permanent trading and registry ban against both Mr. Pecker and Vision Financial Partners, also lobbying a fine of over $6.5 million.
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The suit accused the Pecker and Vision of fraudulently luring U.S. and Canadian investors to trade off-exchange binary options by misleading them and omitting material facts. This included a failure to mention they would be unable to withdraw funds from their accounts unless a minimum number of trades had occurred and that client funds would be transferred to bank accounts for the defendants’ personal use. In addition, the binary options contracts were traded on off-shore platforms including those operated by Banc de Binary Ltd., SpotOption, and Binex Markets.
Furthermore, the CFTC said that from as early as October 2012 until 2017, Pecker and Vision illegally accepted investments and advised customers, as well as managing their funds while they are not registered with the commission, and the clients are not eligible contract participants. The order also finds that rather than trade binary options on behalf of their clients, the defendants misappropriated almost $2 million of client funds, and diverted client funds to Westward and Coucarin.
According to the watchdog statement: “The court also found that Westward and Coucarin did not provide any legitimate services nor had any legitimate entitlement or interest to the client funds, and must disgorge those funds.” Based on this, the judgment orders require the relief defendants Westward and Coucarin to disgorge ill-gotten client funds in the amounts of $211,160 and $1,565,480, respectively.
A relief defendant is a person or entity who has received ill-gotten funds or assets as a result of the illegal acts of the other named defendants. A relief defendant is typically named because the plaintiff seeks injunctive relief to protect the sought funds or assets and apply them to any eventual recovery in the case.