US Regulator Orders Peak Capital Management Group to Pay over $1.6 Million for Forex Fraud

A US-based fraudster has been charged by the CFTC for carrying out currency fraud. The culprit, Scott Beatty, will pay

An unaccomplished forex trader was found guilty of misrepresenting his financial services solution to Japanese investors by the US watchdog for financial derivatives. Scott Beatty, a Utah resident who ran Peak Capital Management (PCMG), duped investors during a three-year period when he defrauded investors. The investigation carried out by the Commodity Futures Trading Commission (CFTC) resulted in Beatty facing a financial penalty and suffering a permanent registration ban to conduct regulated activities.

The fraudster falsely represented his trading performance to clients as he lured them into his scheme. According to the CFTC’s investigation, during a 3-year period, from January 2011 through to April 2014, Beatty collected $825,000 from at least 49 traders. Beatty’s unregulated firm obtained the client funds in his own account, a regulated activity under US federal securities laws. The Order states: “Rather than directing customers to open individual customer accounts, Beatty opened a single trading account in the name of PCMG that suffered losses, while Beatty misappropriated customer funds for his personal use, and returned some funds to customers as purported profits in excess of principal in the manner of a Ponzi scheme.”

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Adding salt to the wounds, Beatty tried his luck by misleading the regulator during their investigation. The Order finds that during the CFTC’s investigation, Beatty made false and misleading written statements to the CFTC on three occasions. Beatty went as far as denying any claim that he was operating an unregulated FX managed account scheme, and is thus reported: “Beatty lied, claiming that neither he nor his company solicited customers for any managed forex accounts or forex related products.”

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Beatty ran his pyramid scheme by using part of the funds collected by clients to pay back other clients’ alleged profits. The CFTC states that of the $825,000 Beatty accepted from customers, he lost $71,000 trading, this figure includes commissions amounts and fees, and of the remaining $754,000, he misappropriated $641,000, using most of the funds to make fabricated payments of profits to customers and to pay personal expenses, including car payments, retail purchases and travel.

Beatty attracted investors through the internet, publishing his false trading performance online in a bid to capture his clients, and the fraudster published returns of 43.9% which were found to be false as per the investigation.

The CFTC has been actively monitoring the FX trading environment as the amount of fraud has skyrocketed since the 2008 recession. The regulator reported today that it had filed a civil enforcement complaint against a Las Vegas resident, Daniel Shak, for breaching rulings that prohibited him from trading in energy derivatives.

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