The Commodity Futures Trading Commission (CFTC) filed a federal court enforcement action on Wednesday against Jason Amada and Amada Capital Management LLC (ACM), a New York-based entity which he owns and controls. The action was filed in the United States District Court for the Southern District of New York.
The complaint charges Amada with soliciting potential clients in a fraudulent manner to open managed trading accounts for off-exchange forex contracts. In particular, one tactic used was to overinflate his trading experience and profitability.
The complaint from the commodities regulator also alleges that ACM claimed it would implement a hedging strategy to prevent losses of more than one per cent. This, however, was untrue. The CFTC also states that ACM failed to attain the proper authorisation to provide financial services in the United States.
Then, Amada hid large trading losses which were a result of his managed forex trading. Specifically, the complaint alleges that in less than two months of trading, Amada caused around $280,000 in losses. With one client in particular, within nine days of trading, he managed to lose around 92% of the client’s account value.
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In order to conceal the significant losses, Amada transferred commissions into a client’s account. The CFTC statement alleges that he carried out illegal activities at least between February 2014 and November 2015.
The US commodities watchdog is seeking civil monetary penalties, permanent registration and trading bans and disgorgement against Amada. In addition, the CFTC seeks a permanent injunction against further violations of the Commodity Exchange Act and its regulations.
New York State Office Charges Amada
On Wednesday, the New York State Office of the Attorney General also announced a criminal indictment against Amada for Grand Larceny in the Second Degree and a violation of the Martin Act. The Martin Act is a New York State statute that prohibits the illegal sale of commodities products.