The U.S. District Court for the northern district of Illinois granted a CFTC motion for entry of a default final judgment against a Canadian attorney who has been accused of breaking futures laws by the U.S. Commodity Futures Trading Commission (CFTC). The order imposes a civil monetary penalty of $280,000 and permanent registration, trading and solicitation bans on the defendants as sanctions for their role in a ‘money pass scheme’.
The U.S. derivatives regulator alleged that John D. Briner, a disbarred Canadian attorney who resides in Abbotsford, British Columbia, and his former law firm, MetroWest Law Corporation located in Vancouver, Canada, had engaged in fictitious single stock futures transactions and trading non-competitively on OneChicago LLC (OneChicago), an electronic futures exchange in Chicago, Illinois.
More specifically, the CFTC alleged in its complaint that Matthew J. Marcus, with the help of John D. Briner, carried out a scheme commonly known as a ‘money pass’ from January 28, 2014 to February 5, 2014. Over seven trading days, Briner provided Marcus, his former client, with his unique password and login information and informally authorized him to enter trades in an account carried in the name of MetroWest Law Corporation.
This way, the defendants moved money from the MetroWest account to Tech Power, through a series of 1,248 pre-arranged, non-competitive trades using single stock futures contracts on OneChicago.
Money pass scheme
The order further states that Marcus placed in the two accounts nearly simultaneous and matching orders on eight illiquid single stock futures products, which overall resulted in the unlawful transfer of $390,000 from MetroWest to Tech Power.
How to Generate Leads Outside of the Box?Go to article >>
The alleged scheme known as “money pass” typically sees one trader intentionally losing money to another by buying up contracts at a high price and selling them to the other trader at a lower price. However, the court does not say why Briner allegedly moved money to Marcus.
The Order finds that under the Commodity Exchange Act and CFTC regulations, Briner and MetroWest are strictly liable as principals for the trading violations of their agent, Marcus, and finds Briner, as MetroWest’s sole owner and principal, liable as a control person for MetroWest’s trading violations.
In addition to the fiscal penalties, the court’s order imposed permanent trading, solicitation and registration bans, and prohibits the two parties involved from violating of the Commodity Exchange Act and CFTC regulations, as charged.
On July 7, 2016, a Florida district court entered a separate consent order imposing a $250,000 civil monetary penalty and five-year registration, trading and solicitation bans against Marcus and Tech Power.
According to the official announcement, the CFTC appreciates the assistance of the British Columbia Securities Commission and OneChicago LLC’s regulatory staff.