An Illinois federal judge banned a Nebraska-based commodities pool operator and fined her nearly USD2 million for operating a fraudulent commodity pool scheme, the US Commodity Futures Trading Commission (CFTC) said Tuesday.
The default judgement order, issued today by Judge Joan B. Gottschall of the US District Court for the Northern District of Illinois, follows a CFTC complaint filed in February 2016 against Grace Elizabeth Reisinger based on her operation of an unregistered commodities pool called NCCN LLC via her company ROF Consulting LLC.
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The order requires Reisinger and the firm to pay a $1.1 million civil monetary penalty and disgorge roughly $500,000 in ill-gotten gains plus $497,893 to defrauded pool participants. Additionally, it imposes permanent trading and registration bans against Reisinger and her company.
Judge Gottschall’s order also prohibits Ms. Reisinger from violating the Commodity Exchange Act and CFTC regulations as charged in the agency’s complaint. His order follows a CFTC investigation on the matter last year, which found that the two parties to brought at least $2.75 million into the pool between 2005 and 2008 through misrepresentations made to clients.
The regulator initially sued Grace and her company back in 2011, claiming that they wrongly told investors that participants of its unregistered pool were qualified eligible persons, a term that often refers to large investors or registered industry insiders who understand markets and risks. Reisinger had filed for registration exemption with the National Futures Association (NFA), but wasn’t actually eligible, the CFTC said.
In addition, the CFTC said Reisinger did not know whether participants who put up $2 million of the $4 million in the pool were qualified or not. She had also told her clients that she was exempt from registering because the participants were all qualified, which the jury found was untrue.