The U.S. Commodity Futures Trading Commission (CFTC) announced on Friday the filing of an amended Complaint against Daniel K. Steele of Missouri, and his firm, Champion Management International, LLC (Champion Management), charging them with misappropriation, issuance of false account statements, and other acts of fraudulent solicitation and concealment.
The CFTC alleges that from February 28, 2011 through September 25, 2013, Steele individually and acting as an agent of Champion Management, solicited at least $1.97 million from at least 24 pool participants to participate in three Forex pools.
The amended complaint alleges that Steele knowingly made material misrepresentations to active and prospective pool participants concerning his Forex trading and trading results, such as: “I’ve been doing this long enough to know what I can consistently deliver above expenses, in all market conditions…the return is fixed and is currently 5% per month on your invested amount compounded… .”
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For any intelligent FX investor, Steele’s statements should have served as flashing warning signs. There are many unscrupulous people operating in all the financial markets and the popularity of retail FX trading of course attracts scammers and fraudsters to the field. While some are very sophisticated and convincing, an easy way to spot a liar is if he promises guaranteed results in trading the FX markets. Leveraged margin trading is inherently risky and no one can assure performance in the face of unknowable risks that might rise at any moment. All reputable brokers and fund managers warn investors of the risks, Steele did not.
The CFTC’s amended complaint, filed on July 16, 2014, follows a previous complaint from September 25, 2013, alleging, among other things, that the Defendants failed to disclose material information and failed to disclose that the counterparty to the retail FX transactions that were offered or entered into with the respective pools was not registered with the CFTC as a Retail Foreign Exchange Dealer (RFED), in violation of the Commodity Exchange Act (CEA).
The amended complaint also alleges that Steele concealed trading losses, misappropriated approximately $1 million of pool participants’ funds for personal use, and issued false account statements to pool participants reflecting that they were earning profits, when instead, Steele was misappropriating the majority of their funds, all in violation of the CEA.
The CFTC stated in the announcement that it seeks to achieve with its litigation a return of ill-gotten gains, restitution, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the federal commodities laws.