CFTC Slaps Two Commodity Pool Operators with Fraud Charges
- The firms mislead investors with false statements about their worst losses.
The US commodities markets regulator, CFTC, has moved against two commodity pool operators and charged LJM Partners Ltd and LJM Funds Management Ltd, which collectively operated as LJM, with commodity pool fraud and for releasing false statements about losses. In addition, charges were brought against Anthony J. Caine, Chairman and owner of the two companies, and Anish Parvataneni, Chief Portfolio Manager.
Thursday’s announcement detailed that the two companies operated between mid-2016 and 2018 managing several commodity pools, a mutual fund and individually managed client accounts. At the peak, the firms had more than $1 billion in assets under management but faced heavy losses after a 20 points spike in VIX in 2018, after which they closed their businesses.
The companies are further blamed for hiding their losses, issuing false and misleading statements. Charges for loose Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term practices in options trading strategies were also raised.
The Leadership Is Liable
The chairman was charged for his liability for the companies’ misrepresentations and also for failing to diligently supervise employees and agents.
“It is imperative that all participants in our markets receive full disclosure of material information and protection from fraudulent practices,” said Vincent McGonagle, 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’s acting Enforcement Director.
“When companies or individuals make false or misleading statements about the risks of trading, or fail to diligently supervise their employees or agents’ activities relating to their business as CFTC registrants, the CFTC will seek to hold them accountable.”
The commission has already settled fraud charges against LJM’s former Chief Risk Officer and registered AP of LJM, Arjuna Ariathurai. He agreed to pay a civil monetary penalty of $150,000 and has to disgorge $83,333, along with prejudgment interest of $14,111. Furthermore, he received a cease and desist order, requiring him not to engage as a CFTC registrant for three years.
LJM Denies Allegations
After publishing the article, LJM reached out to Finance Magnates, denying all regulatory allegations.
"We categorically deny all of the SEC’s and CFTC’s assertions, have summarily rejected their respective settlement offers and will vigorously defend ourselves. We will demonstrate that risk of loss was fully disclosed, LJM did not deviate from historic portfolio and risk management practices, and the losses sustained on February 5-6, 2018 occurred as a result of events outside of LJM’s control," Caine said.
"The suggestion that LJM committed fraud has no factual basis and is undermined by the fact that I personally lost over $100 million on February 5-6, 2018, and LJM portfolio managers invested more than $500,000 new capital on February 1, 2018 in the same funds as LJM investors."
"It is highly ironic that the SEC and CFTC are now filing claims against LJM, which was harmed by their failure to oversee markets and prevent manipulation in VIX and SPX options markets."
Note: The article has been updated with LJM's comments.
The US commodities markets regulator, CFTC, has moved against two commodity pool operators and charged LJM Partners Ltd and LJM Funds Management Ltd, which collectively operated as LJM, with commodity pool fraud and for releasing false statements about losses. In addition, charges were brought against Anthony J. Caine, Chairman and owner of the two companies, and Anish Parvataneni, Chief Portfolio Manager.
Thursday’s announcement detailed that the two companies operated between mid-2016 and 2018 managing several commodity pools, a mutual fund and individually managed client accounts. At the peak, the firms had more than $1 billion in assets under management but faced heavy losses after a 20 points spike in VIX in 2018, after which they closed their businesses.
The companies are further blamed for hiding their losses, issuing false and misleading statements. Charges for loose Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term practices in options trading strategies were also raised.
The Leadership Is Liable
The chairman was charged for his liability for the companies’ misrepresentations and also for failing to diligently supervise employees and agents.
“It is imperative that all participants in our markets receive full disclosure of material information and protection from fraudulent practices,” said Vincent McGonagle, 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’s acting Enforcement Director.
“When companies or individuals make false or misleading statements about the risks of trading, or fail to diligently supervise their employees or agents’ activities relating to their business as CFTC registrants, the CFTC will seek to hold them accountable.”
The commission has already settled fraud charges against LJM’s former Chief Risk Officer and registered AP of LJM, Arjuna Ariathurai. He agreed to pay a civil monetary penalty of $150,000 and has to disgorge $83,333, along with prejudgment interest of $14,111. Furthermore, he received a cease and desist order, requiring him not to engage as a CFTC registrant for three years.
LJM Denies Allegations
After publishing the article, LJM reached out to Finance Magnates, denying all regulatory allegations.
"We categorically deny all of the SEC’s and CFTC’s assertions, have summarily rejected their respective settlement offers and will vigorously defend ourselves. We will demonstrate that risk of loss was fully disclosed, LJM did not deviate from historic portfolio and risk management practices, and the losses sustained on February 5-6, 2018 occurred as a result of events outside of LJM’s control," Caine said.
"The suggestion that LJM committed fraud has no factual basis and is undermined by the fact that I personally lost over $100 million on February 5-6, 2018, and LJM portfolio managers invested more than $500,000 new capital on February 1, 2018 in the same funds as LJM investors."
"It is highly ironic that the SEC and CFTC are now filing claims against LJM, which was harmed by their failure to oversee markets and prevent manipulation in VIX and SPX options markets."
Note: The article has been updated with LJM's comments.