On Monday, the U.S. Commodity Futures Trading Commission (CFTC), the independent agency that regulates futures and option markets, announced that it obtained a federal court order requiring Ghassan Tawachi and his company to pay nearly $1,500,000 in penalties for fraudulently marketing his trading software, according to a CFTC statement.
The CFTC says Ghassan Tawachi of Irvine, California, and his firm, Intelligent Trades, LLC, a Florida limited liability company, fraudulently solicited customers for his futures trading software, raking in a total of $479,755, by misrepresenting the software’s effectiveness for several months.
In connection with the promotion of his software, Tawachi made a series of materially false claims to bolster the credibility of his system. The claim was made that the trading system could provide monthly returns of 15 to 20 percent, the CFTC said.
Lies to give credibility
More specifically, clients paid a monthly fee of 10 percent of the value of their accounts through Tawachi’s firm, Intelligent Trades, but in actual trading the software failed to produce any profits for users.
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Tawachi is also charged with acting as a commodity trading advisor without registering with the Trading Commission and violating a 2012 order that prohibited him from trading commodity futures on behalf of others. Mr. Tawachi has agreed previously to settle claims of defrauding buyers of his software system by paying the agency $280,800, and is barred from the commodities industry.
On July 29, 2016, Judge Andrew J. Guilford of the U.S. District Court for the Central District of California (Santa Ana) entered a Consent Order requiring the defendants to jointly and severally disgorge $479,755 of ill-gotten gains and pay a $1 million civil monetary penalty.
In addition to the fiscal penalties, the court order, which stems from a CFTC complaint originally filed on January 7, 2016, also imposes permanent trading, solicitation and registration bans against the defendants. Furthermore, it permanently bars them from engaging in any commodity-related activities and requires them to cease and desist from violating the provisions of the CEA, as charged.
The U.S. regulator has been actively targeting firms and individuals involved in the illegal trading and fraudulent activity. The watchdog has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud that involves individuals and firms, often unregistered, offering investments in commodity pools.