On August 26, 2009, NFA issued a Complaint charging Frontline Financial, Frontline Advisors and Charles Guard Rice with failure to disclose material information to fund participants concerning the fund’s investments with convicted felon, Luis Rivas, and with other forex traders who were affiliated with Rivas, including information about the losses incurred with respect to these investments and Frontline Financial’s redemption of most of its interest in the fund. Frontline Financial was further charged with failure to file an exemption notice, disclosure document or annual financial statement for the Fund with NFA and failure to furnish participants with a financial statement for the Fund.
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On February 16, 2010, Frontline Financial and Frontline Advisors were ordered to withdraw from NFA membership and, thereafter, they were permanently barred from NFA membership and from acting as a principal of an NFA Member. Charles Guard Rice was ordered to withdraw from NFA associate membership and as a principal of Frontline Financial and Frontline Advisors and, thereafter, he was ordered not to reapply for NFA membership or associate membership or act as a principal of an NFA Member for five years.
If after expiration of the five-year membership bar Rice applies for NFA membership or associate membership or becomes a principal of an NFA Member, then, in any event, he was ordered to pay a $10,000 fine, due and payable at the same time he applies for NFA membership or associate membership or becomes a principal of an NFA Member.