This Friday another FX scam was revealed by the US Commodity Futures Trading Commission (CFTC). The regulator has filed and settled enforcement actions against operators of Amada brand, who were marketing passive returns through their bogus foreign currency trading venture.
The US derivatives regulator hit former Wall Street stockbroker Jason Amada and his company Amada Capital Management LLC, both of New York, with penalties totaling $596,700. Amada held himself out to the public as an experienced FX trader and the operator of multiple investment funds.
The penalties are the latest to be handed out in a long-running crackdown on online trading providers targeting retail investors, which has seen many brokers and their principals pay millions in fines.
The settlement involves charges that, from October 2013 and proceeding through December 2018, the defendants fraudulently solicited retail investors to open forex trading accounts by misrepresenting their experience and profitability, among other things.
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While leading the Forex Ponzi scheme Jason Amada had made several violations including the fraudulent solicitations, false statements, and fraudulent misappropriation. The offender has created numerous fake account statements. With the help of them, he was misleading investors about the status of their investments.
In a separate action brought by the New York State Office of the Attorney General, Amada pleaded guilty to felony charges of grand larceny and operating a scheme to defraud.
Amada was sentenced in a New York court in 2019 to three to six years in prison after signing confessions of judgment in favor of his eight victims. He was arrested a year before on charges of fraudulently soliciting a client to invest nearly $300,000 and then losing 99% of her principal in less than two months of aggressive trading. Following his arrest, additional victims reported that they had invested and lost money with Amada under similar circumstances.
In reality, the money investors were giving the offender was spent on his own expenses. He was also paying some of the money to several investors so that his scheme would stay unrevealed.
The CFTC said the recent action should set a precedent for additional enterprises that fail to comply with the commission’s requirements. The case highlights regulators’ concerns about the risks posed by managed trading schemes, which the watchdog says it has seen an increase in websites that fraudulently promote such products and its related advisory services.