The Commodity Futures Trading Commission (CFTC) has continued its bust of fraudulent schemes. On Wednesday, the agency filed a civil enforcement action against Kay Yang and her two companies, AK Equity Group LLC and Xapphire LLC, for foreign exchange (forex) fraud.
Yang and her two companies have been charged with fraud and misappropriation related to the forex trading scheme. They are blamed for soliciting funds totaling at least $15.7 million from at least 67 investors.
Additionally, the US agency named Yang’s husband, Chao Yang, as a relief defendant for receiving the investor funds of the trading scheme.
The US Securities and Exchange Commission (SEC) filed a separate civil complaint against Yang and her companies for the same schemes.
Defrauding Investors
The complaint lodged by the CFTC detailed that Yang with her two companies ran the trading scheme from around April 2017 through March 2020. They approached investors and collected funds for the sole purported purpose of forex trading.
The companies are alleged to have made several false representations to the existing and potential pool participants of the scheme. The false claims include the managing of hundreds of millions of dollars in a variety of investment vehicles and achieving positive monthly returns.
Moreover, they claimed that all the collected investor proceeds were allocated to forex trading and were adhering to strategies that include low leverage ratios and moderate trading frequencies.
“These were false claims and the defendants routinely suffered trading losses using high leverage and high-frequency trading strategies,” the CFTC stated.
In addition, Yang was blamed for using the investor funds for personal expenses. Also, she transferred around $200,000 to her personal bank account and another $1.4 million to her husband’s. Further, she transferred more than $1 million to a joint bank account which is in the name of her and her husband.
The CFTC is now seeking full restitution of the solicited funds to the trading pool participants and disgorgement of all ill-gotten gains. Furthermore, the agency wants to impose civil monetary penalties and permanent registration and trading bans, along with a permanent injunction.
