A Florida federal judge banned a Florida resident trader and his defunct firm from commodities trading and fined them
$485,000 for allegedly conducting illegal, off-exchange transactions with retail customers on borrowed money, the U.S. Commodity Futures Trading Commission (CFTC) said Tuesday.
The default judgement order, issued today by Judge Cecilia M. Altonaga of the U.S. District Court for the Southern District of Florida, follows a CFTC complaint filed in September 2016 against Kelvin Burgos and his company K.B. Concepts Group, LLC, alleging numerous violations.
The order requires Burgos and the firm to pay a $364,773 civil monetary penalty and disgorge $121,591 in ill-gotten gains. Additionally, it imposes permanent trading and registration bans against Burgos and K.B. Concepts.
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Judge Cecilia’s order also prohibits Defendants from violating the Commodity Exchange Act and CFTC regulations as charged in the September’s complaint. Her order follows a CFTC investigation on the matter, which noted that Burgos repeatedly engaged in “off-exchange precious metals transactions on a leveraged, margined or financed basis, (2) K.B. Concepts acted as a Futures Commission Merchant (FCM) without being registered as such, and (3) Burgos controlled K.B. Concepts and failed to act in good faith or knowingly induced the violations by K.B. Concepts, and was therefore liable for K.B. Concepts’ violations of the Commodity Exchange Act.”
The complaint claims that from September 2012 and continuing through to at least February 2013, Burgos and K.B. Concepts, by and through their employees, illegally solicited retail customers by telephone to buy physical precious metals on a leveraged, margined or financed basis. But the commodities watchdog alleged that the unauthorised firm’s customers never took delivery of the metals.
The same complaint found that Burgos and K.B. Concepts acted as an FCM without being so registered.
The CFTC noted that, under the Dodd-Frank law, off-exchange leveraged, margined or financed transactions are illegal unless they result in actual delivery of metal within 28 days. However, the regulator found that precious metals were never delivered to the customers by Burgos and K.B. Concepts.