Federal Court Orders Matthew Marcus to Pay $250,000 for Money Pass Scheme

CFTC levied a fine and permanent trading ban against Marcus and his company for engaging in fictitious futures transactions.

On Thursday, the U.S. Commodity Futures Trading Commission (CFTC), the ‎independent agency that regulates futures and option markets, announced that it ‎obtained a federal court consent order requiring defendants Matthew J. Marcus his ‎company Tech Power Inc to pay a $250,000 civil monetary penalty, according to ‎a CFTC statement. ‎

The U.S. derivatives regulator alleged that Matthew J. Marcus of California and ‎his company Tech Power Inc., a Nevada corporation located in California, had ‎engaged in fictitious single stock futures transactions and trading non-‎competitively on OneChicago LLC (OneChicago), an electronic futures exchange ‎in Chicago, Illinois.‎

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On June 30, 2016, Judge Milton I. Shadur of the U.S. District Court for the ‎Northern District of Illinois entered a Consent Order requiring Marcus and Tech ‎Power jointly to pay a $250,000 civil monetary penalty. ‎

In addition to the fiscal penalties, the court’s order, which stems from a CFTC ‎complaint originally filed in on April  2015, also imposes permanent trading, ‎solicitation and registration bans against Marcus for a period of 5 years, and prohibits ‎the two parties involved from violating of the Commodity Exchange Act and CFTC ‎Regulations, as charged.‎

The start date of the regulatory actions is noteworthy, as it could be seen as a reminder that such investigations often take some time, and that CFTC is not afraid of looking back in time to find violations.

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Money Pass Scheme

More specifically, the CFTC alleged in its complaint that Marcus, with the help of ‎John D. Briner, a disbarred Canadian attorney, 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 (MetroWest), a ‎Canadian law firm. ‎

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.

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.‎

According to the official announcement, the CFTC appreciates the assistance ‎of the British Columbia Securities Commission, and confirmed that it will continue its litigation against the involved Canadian defendants, Briner and MetroWest.‎

The U.S. regulator has been actively ‎targeting firms and individuals involved in the illegal ‎‎trading and fraudulent activity. ‎The watchdog has issued several customer ‎protection Fraud Advisories that ‎provide the warning signs of ‎fraud, including the ‎Commodity Pool Fraud Advisory, ‎which warns customers about a type of fraud that ‎involves individuals and firms, ‎often unregistered, offering investments in commodity ‎pools.‎

 

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