More Misappropriation Found by NFA as R2 Capital Gets Served MRA
- The NFA has announced that it is taking emergency action against R2 Capital Group LLC. A CPO, R2 Capital recently became an NFA Member in September and is accused of misappropriating $1.2 million.
The NFA has announced that it is taking emergency action against R2 Capital Group LLC. A commodity pool operator (CPO), R2 Capital recently became an NFA Member in September. Following its granting of membership, the NFA has taken the Member Responsibility Action (MRA) and Associate Responsibility Action against R2 Capital and its controlling parties, Randell Vest, Ryan Tomazin and Ryan Madigan as the regulator discovered accounting irregularities when reviewing the firm’s financials in October. With the MRA, “R2 Capital, Vest and any person acting on R2's behalf are prohibited from soliciting or accepting any funds from customers or investors, soliciting investments for any managed accounts, commodity pools or other investment vehicles, including the Commercial Pool or R2 Global Fund I LP (Global Pool), or placing any trades on behalf of customers, commodity pools or investors except liquidation or risk reducing trades. Additionally, they are prohibited from disbursing or transferring any funds over which they exercise control without prior approval from NFA.”
According to the NFA review, R2 Capital failed to submit records that reveal client funds as well as trading performance of two funds they manage. The NFA also found that despite listing their location in New York, activity is also taking place in Florida and in Colorado. In its findings, customers were estimated to have deposited $2.4 million in a managed pool with R2 Capital between 2010 and 2011. Available records of transfers between R2’s FCM and their banks, the fund was estimated to have lost $1.2 million due to trading losses, with another $1.2 million currently unaccounted for. Based on the findings, as well as the lack of R2 Capital from providing current records, other than a single balance of $800, the NFA believes that the firm’s controlling parties “may have converted pool assets totaling more than $1 million for their own personal use, through numerous Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term to themselves or their holding companies.” (read the MRA)
The MRA follows similar allegations by the CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term earlier this month against another CPO, Direct Investment Products, as well as the NFA accusing Alphametrix Group of misappropriation in October. While not as industry far-reaching as broker fraud, as custodians of client funds, the misappropriation could lead to greater rules invoked upon CPOs and money managers.
The NFA has announced that it is taking emergency action against R2 Capital Group LLC. A commodity pool operator (CPO), R2 Capital recently became an NFA Member in September. Following its granting of membership, the NFA has taken the Member Responsibility Action (MRA) and Associate Responsibility Action against R2 Capital and its controlling parties, Randell Vest, Ryan Tomazin and Ryan Madigan as the regulator discovered accounting irregularities when reviewing the firm’s financials in October. With the MRA, “R2 Capital, Vest and any person acting on R2's behalf are prohibited from soliciting or accepting any funds from customers or investors, soliciting investments for any managed accounts, commodity pools or other investment vehicles, including the Commercial Pool or R2 Global Fund I LP (Global Pool), or placing any trades on behalf of customers, commodity pools or investors except liquidation or risk reducing trades. Additionally, they are prohibited from disbursing or transferring any funds over which they exercise control without prior approval from NFA.”
According to the NFA review, R2 Capital failed to submit records that reveal client funds as well as trading performance of two funds they manage. The NFA also found that despite listing their location in New York, activity is also taking place in Florida and in Colorado. In its findings, customers were estimated to have deposited $2.4 million in a managed pool with R2 Capital between 2010 and 2011. Available records of transfers between R2’s FCM and their banks, the fund was estimated to have lost $1.2 million due to trading losses, with another $1.2 million currently unaccounted for. Based on the findings, as well as the lack of R2 Capital from providing current records, other than a single balance of $800, the NFA believes that the firm’s controlling parties “may have converted pool assets totaling more than $1 million for their own personal use, through numerous Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term to themselves or their holding companies.” (read the MRA)
The MRA follows similar allegations by the CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term earlier this month against another CPO, Direct Investment Products, as well as the NFA accusing Alphametrix Group of misappropriation in October. While not as industry far-reaching as broker fraud, as custodians of client funds, the misappropriation could lead to greater rules invoked upon CPOs and money managers.