CFTC Penalizes Two Commodity Trader for Operating Illegal Metals ‎Scheme

In addition to the fiscal penalties, the cours order imposed permanent trading, ‎solicitation and registration bans.

A Florida couple and their company, Mintco LLC, have been ordered to pay nearly USD350,000 in penalties for alleged illegal, off-exchange precious metals transactions and registration violations.

The U.S. Commodity Futures Trading Commission said Wednesday that Judge Beth F. Bloom of the U.S. District Court for the Southern District of Florida granted the CFTC’s motion for a final default judgement against the company and its owners Stuart Rubin and Richard Q. Zimmerman.

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From 2011 through at least 2015, Mintco solicited retail customers to engage in leveraged, margined, and financed precious metals (including gold and silver) transactions and it received through its employees undisclosed investment amounts in addition to excessive sums in commissions from such customers, the judgement states.

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The order also finds that the company accepted clients’ trades and funds and therefore acted as Eligible Contract Participants (ECPs), without registering as such with the CFTC.

The orders also imposed three-year trading and permanent solicitation and registration bans against Mintco, Rubin, and Zimmerman.

According to the complaint, Rubin and Zimmerman represented to customers that precious metals would be purchased and stored at a depository on the customers’ behalf. The defendants, however, generally failed to purchase and store sufficient amounts of precious metals for their customers, instead misappropriating customer funds for other purposes.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, off-exchange leveraged transactions such as those conducted by the defendants are illegal unless they result in actual delivery of metal within 28 days. However, the regulator found that precious metals were never delivered to the customers, court documents state.

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