This was in commodities, but the amounts these jerks are fined is a joke. $150k fine and a cease and desist order after causing losses of $5.9MM?
Quote:
RELEASE: pr7620-17
September 28, 2017
CFTC Orders Connecticut-Based Tillage Commodities, LLC to Pay a $150,000 Civil Monetary Penalty for Supervision Failures
Washington, DC – The Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Connecticut-based Tillage Commodities, LLC (Tillage), a Commodity Pool Operator (CPO), for failure to supervise its fund administrator’s operation of the commodity pool’s bank account containing pool participants’ funds. Tillage has been registered as a CPO with the CFTC since 2013, with its principal office located in Stamford, Connecticut.
The CFTC Order requires Tillage to pay a $150,000 civil monetary penalty and to cease and desist from further violations of the Commodity Exchange Act, as charged.
Specifically, the Order finds that over the course of 21 days, from at least March 3, 2016 through March 24, 2016, Tillage’s fund administrator received seven fraudulent requests to transfer funds from the commodity pool’s bank account. These unauthorized transfers to two purported private technology companies in Hong Kong ranged in amount from $200,000 to $3 million. These requests were made by an unknown party who spoofed Tillage’s managing member’s email address and sent requests that imitated, in some respects, Tillage’s typical transfer requests, the Order finds. Tillage’s fund administrator processed five of these requests, which resulted in a $5.9 million loss of pool participants’ funds, or 64% of the pool’s total capital, according to the Order.
Although only the fund administrator had the right to make withdrawals from the pool bank account, Tillage had no procedures in place to monitor the administrator’s operation of this account and no system in place to alert it when transactions cleared from the account, the Order states.
During the period when the fraud occurred, the Order finds that Tillage only reviewed the pool bank account’s balance once during the month to verify its calculation of the pool’s net asset value. Furthermore, while Tillage could review the activity in the account on the bank’s website, from January 7, 2016 to March 24, 2017, Tillage failed to do so.
The inadequacy of Tillage’s supervision of its agent regarding wire transfers and the operation of the pool’s bank account, and the insufficiency of Tillage’s policies and systems, delayed detection of the ongoing fraud, the Order finds.
The CFTC thanks the National Futures Association for its assistance in this matter.
CFTC Division of Enforcement staff members responsible for this case are Lucy C. Hynes, Kyong J. Koh, Traci L. Rodriguez and Paul G. Hayeck.
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Last Updated: September 28, 2017
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