Yorkshire Group Charged $1.5m for Illegal Transactions

The Yorkshire Group illegally solicited and accepted funds from retail customers to purchase physical precious metals.

The U.S. Commodity Futures Trading Commission (CFTC) has issued a statement saying that it has obtained a court order default judgement against The Yorkshire Group and its principal Scott Platto for engaging in illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined or financed basis.

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Illegal Off-Exchange Transactions

The events took place from September 2011 to August 2012, whereby Yorkshire and Platto illegally solicited and accepted $93,700 from eleven retail customers to purchase physical precious metals, such as gold, silver, platinum, and palladium, on a leveraged, margined or financed basis. Yorkshire and Platto received commissions totalling $29,801 in connection with those transactions.

It was found that Platto, as controlling person for Yorkshire, is liable for Yorkshire’s violations of the CEA as well as his own violations, and that Yorkshire is liable as principal for the CEA violations committed by its officers, employees, and agents, including Platto.

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Under the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010, off-exchange leveraged, margined, or financed transactions are illegal unless they result in actual delivery of metal within 28 days.

According to the CFTC, precious metals were never actually delivered to the defendants’ customers either by the defendants or by Hunter Wise Commodities, the wholesaler through which the defendants conducted their customers’ transactions.

Penalties

As reported by Finance Magnates, the CFTC has already brought an enforcement action against Hunter Wise, charging the company with engaging in illegal, off-exchange precious metals transactions and other violations.

At a court trial in May 2014, it was found that Hunter Wise neither purchased precious metals on the retail customers’ behalf nor delivered metals to the retail customers, and entered a permanent injunction and imposed penalties on Hunter Wise.

Yorkshire and Platto meanwhile are jointly required to pay a penalty of $1.54 million and repay $29,801 in fraudulent gains. Permanent trading and registration bans have also been imposed on both Yorkshire and Platto in violation of the Commodity Exchange Act (CEA) and CFTC Regulations.

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