The U.S. Commodity Futures Trading Commission (CFTC) today reported that it has filed a civil enforcement action against Cayman Islands-based Marbury Advisors Inc. and its principal Tracy Lee Thomas – believed to be based in Virginia.

The charges were filed in a North Carolina U.S. District Court and described that Marbury Advisors and Tracy Lee Thomas had fraudulently solicited more than $1.2m from investors, after misrepresenting the instruments the company would trade in, and failing to disclose associated risks, among other alleged findings including fraud and deceit and significant losses. 

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The defendants allegedly said they would trade a conservative product but instead traded much riskier contracts. Instead of trading treasury bills – a conservative asset – the defendants traded commodity futures contracts, including the Chicago Mercantile Exchange (CME) E-mini S&P 500 futures contract, and the Chicago Board of Trade 2-Year Treasury Note futures contract, according to the CFTC complaint.

Alleged Fabricated Bank Statement

The CFTC alleges that the defendants fraudulently deceived at least two clients from around February 2011 through August 2012, including Thomas’ own father-in-law. The complaint describes that Thomas misrepresented his company’s and his own prior investment experience and trading success, and how the investment funds of customers would be handled.

To make matters worse, the complaint says that Thomas had given one customer fabricated bank account statements that purported to show the funds invested in Treasury Bills or Treasury Notes, while that customer’s contribution was allegedly in Marbury’s commodity futures account, and didn’t disclose that nearly all the money had been lost from trading the riskier contracts. The CFTC said that the Cayman Islands Monetary Authority had assisted with the investigation.