The US Commodity Futures Trading Commission (CFTC) has ordered more than $1.0 million in restitution and civil monetary penalties against Andrew Kurzbard and Guardian Asset Group, LLC, following the group’s illegal engagement of off-exchange precious metals transactions, per a CFTC filing.
The action comes amidst a finding that Guardian Asset Group and Mr. Kurzbard had illegally utilized a racket that featured off-exchange transactions in precious metals with retail customers on a leveraged, margined, or financed basis. Per the order, the scam took place between February 2012 and 2013, in which Guardian Asset Group and Mr. Kurzbard solicited retail customers by telephone.
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During this period, Guardian’s customers paid upwards of $1.7 million to the company in connection with precious metals transactions, while the group also received commissions and fees totaling at least $434,000. However, Guardian accepted customer orders and funds, acting as a futures commission merchant without registering as such with the CFTC.
Under existing Dodd-Frank legislation, leveraged, margined, or financed transactions, such as the ones conducted by Guardian, are not legal off-exchange transactions unless they result in actual delivery of metals within a period of days. On Guardian’s part, the metals were never actually delivered in connection with the leveraged, margined, or financed precious metals transactions, testament to its fraudulent nature.
Guardian had succeeded in executing the illegal precious metals transactions via AmeriFirst Management, a group with its own history of enforcement actions against itself dating back to July 2013. In this instance, the regulator launched charges against it and other defendants for similar fraud and other violations.
Consequently, the CFTC has decreed that Guardian and Mr. Kurzbard, jointly and severally, pay restitution of $434,413 and a $651,620 civil monetary penalty. The order also imposes permanent trading and registration bans against Guardian and Mr. Kurzbard to help prevent them from further violating the Commodity Exchange Act.