Thursday, April 17, 2014

NYRT’s Listing is More Evidence That Even the Non-Traded REITs Winners Are Losers

By Craig McCann

The non-traded REIT, American Realty Capital New York Recovery REIT, Inc., renamed New York REIT, became a listed REIT this week. It opened at $10.70 and closed at $10.75 on April 15, 2014. Yesterday, April 16, 2014, it closed at $10.50 and today it closed at $10.62. We’ve posted extensively about the evils of non-traded REITs. You can find those previous posts here.

The April 16, 2014 Wall Street Journal’s “New York REIT Starts Fast” quotes Nicholas Schorsch as saying the first day’s close of $10.75 was a “victory” and reflected the “most successful” of his listings. You would think from his comments that investors in the non-traded REIT had done well but that is not the case.

Based on NYRT’s $10.61 closing price, the value of the $1.5 billion invested while NYRT was non-traded is $1.82 billion. We estimate that retail investors in this REIT have experienced returns greater than what they would have earned in Vanguard’s liquid, diversified mutual fund of traded REITs (VGSIX), they are about $120 million less than what they would have earned investing in the traded REIT which also focuses its investments in New York, SLG, over the same period.

Figure 1 shows our estimate of the value of retail investors’ investments in American Realty Capital New York Recovery REIT had they instead been made in SLG. The three red dots are the values of those investments at NYRT’s closing price for its first three days of trading.
Investors who suffered through years of illiquidity and lack of transparent pricing with the non-traded REIT ended up doing much worse than they would have if they had purchased a traded REIT with the same New York real estate concentration. We think the relative performance of NYRT relative to SLG is going to get worse. Most of NYRT’s capital was raised and properties purchased were in 2013. Since then New York real estate prices have increased 8% according to a source quoted in the WSJ article. Given the 11.5% upfront fees (nearly $200 million) on this non-traded REIT, NYRT should still be worth less than $10.

So, how does a high-cost, defective investment like American Realty Capital New York Recovery REIT, Inc. become listed to some fanfare? Figure 2 is a screenshot of SLG and VGSIX during the period NYRT was raising most of its money.
During this period, New York real estate values were increasing more rapidly the diversified real estate holdings. Rising New York property values allowed this non-traded REIT to invest $8.80 or less per $10 investors paid into real estate and have that $8.80 plausibly grow to $10 within a year. Of course, investors would be much better off if all of their $10 investment had been invested in this real estate.

The increase in New York real estate relative to diversified portfolios of real estate in recent years illustrated in Figure 2 is only the sunny side of the lack of diversification. Extending the time period back a little we see the enormous decline in the value of an undiversified investment in New York real estate in 2008 and early 2009.
This week’s NYRT listing must be welcome relief for investors who were trapped in the previous, non-traded incarnation. Unfortunately, it may well lead to even more sales of non-traded REITs in the future. In the near future, we will be posting the results of our extensive investigation which shows the non-traded REIT industry has destroyed at least $25 billion of investor wealth over the past 10 years.

Friday, April 11, 2014

Enforcement Actions: Week in Review

SEC ENFORCEMENT ACTIONS

SEC Charges Carter's, Inc.'s Former Vice-President of Operations with Insider Trading and Tipping
, April 10, 2014, (Litigation Release No. 22970)

Richard T. Posey, former Vice-President of Carter's, Inc., has been charged with trading "based on inside information that he possessed as a result of his position at Carter's, and...tip[ping] material nonpublic information to the company's former Vice-President and Director of Investor Relations, Eric M. Martin." Posey consented to the entry of an order that enjoins him from future violations of the securities laws, orders him to pay $60,625 in disgorgement and prejudgment interest, and permanently bars him from acting as an officer and director of a public company.

SEC, Criminal Authorities Halt Florida Ponzi Scheme Targeting Investors in Virtual Concierge Machines, April 8, 2014, (Litigation Release No. 22969)

This week the SEC filed an "emergency action to halt a Ponzi scheme conducted by JCS Enterprises, Inc., T.B.T.I. Inc., and their respective principals Joseph Signore...and Paul L. Schumack II." The SEC alleges that from 2011 through the present, the "defendants fraudulently raised at least $40 million from hundreds of investors nationwide through the ongoing sale of investments in Virtual Concierge machines." The complaint charges the defendants with violating various provisions of the Exchange Act and Securities Act and seeks disgorgement, prejudgment interest, civil penalties, and "any other relief that may be necessary and appropriate." In a parallel action, criminal charges have been announced against Signore and Schumack.

SEC Charges CVS with Misleading Investors and Committing Accounting Violations, April 8, 2014, (Litigation Release No. 22968)

According to the complaint (PDF), CVS Caremark misled "investors about significant financial setbacks and us[ed] improper accounting that artificially boosted its financial performance." Allegedly, the "improper accounting adjustments were orchestrated by Laird Daniels, who was the retail controller at CVS." Daniels has been "charged with accounting violations in a related SEC administrative proceeding." Daniels has agreed to settle these charges by paying a $75,000 penalty and agreeing to a one year bar from practicing as an accountant "on behalf of any publicly traded company or other entity regulated by the SEC." The SEC has charged CVS with violating provisions of the Securities Act and Exchange Act. CVS consented to a final judgment that orders it to pay a $20 million penalty, and permanently enjoins it from future violations of the securities laws.

SEC Charges Hedge Fund Manager for Defrauding Investors, April 7, 2014, (Litigation Release No. 22967)

According to the complaint (PDF), Matthew D. Sample raised almost $1 million through his hedge fund, The Lobo Volatility Fund, LLC, and then "fraudulently diverted approximately one-third of the money for his personal use and to make payments to other investors." Sample has consented to a permanent injunctions from future violations of the securities laws and from "directly or indirectly soliciting or accepting funds from any person or entity for any unregistered offering of securities." The SEC also seeks disgorgement, prejudgment interest, and civil penalties against Sample.

SEC Settles with Remaining Defendant in Fictitious Offering, April 7, 2014, (Litigation Release No. 22967)

A final judgment was entered against Mia Baldassari who allegedly "received $24,500 in investor funds to which she had no lawful claim." The final judgment orders that "she is liable for disgorgement of $24,500, and that such amount shall be deemed satisfied from funds she deposited into the court’s account." Last month, the Court dismissed "relief defendant Brett A. Cooper from the action." Cooper is "now a principal defendant in a separate enforcement action," SEC v. Brett A. Cooper, et. al., "alleging that he and several of his companies perpetrated fraudulent investment schemes from 2008 to 2012. "

CFTC ENFORCEMENT ACTIONS

CFTC Orders California, Florida, and Nevada Companies and Their Owners to Pay More than $940,000 in Restitution to Defrauded Customers for Offering Illegal, Off-Exchange Precious Metals Transactions
, April 8, 2014, (CFTC Press Release No. 6909-14)

The CFTC "filed and settled charges against three companies and their owners for engaging in illegal, off-exchange precious metals transactions, and requires that the Respondents jointly pay more than $940,000 in restitution to their defrauded precious metals customers." The first CTFC Order (PDF) found that PGS Capital Wealth Management, PGS Capital Credit, Inc., and their owner, Charles Victoria "unlawfully solicited retail customers to buy and sell off-exchange precious metals, such as gold and silver, on a financed basis." The second CTFC Order (PDF) found that Rockwell Asset Management, Inc and its owner, Frank O. Davies "unlawfully solicited retail customers to buy and sell off-exchange precious metals, such as gold and silver, on a financed basis." The Orders also found that "customers sent the deposit, finance charge, and commission to PGS and Rockwell, respectively, who then confirmed the transaction and ultimately transferred the funds to Hunter Wise Commodities, LLC, whose existence was not disclosed to the customers." Hunter then allegedly "remitted $462,727.50 back to the PGS companies and Victoria, and $477,210 back to Rockwell and Davies, as their respective portions of the customers’ commissions and fees for the retail financed precious metals transactions executed through Hunter Wise." In 2012, the CFTC sued Hunter Wise "charging it with engaging in illegal, off-exchange precious metals transactions, as well as fraud and other violations."  In March 2014, a bench trial was concluded against Hunter, "and the parties are awaiting the court’s final judgment."

Capital Market Services, LLC Ordered to Pay $275,000 Penalty to Settle CFTC Charges of Violating Minimum Financial Requirement Rules , April 7, 2014, (CFTC Press Release No. 6908-14)

The CFTC filed an Order (PDF) and settled charges that Capital Market Services, LLC  "failed to comply with minimum financial requirements for FCMs and RFEDs." The Order requires CMS " to pay a $275,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act and CFTC Regulations, as charged."

Friday, April 4, 2014

Enforcement Actions: Week in Review

SEC ENFORCEMENT ACTIONS

SEC Charges Two Friends with Insider Trading Ahead of Impending Acquisition Announcement
, April 3, 2014, (Litigation Release No. 22965)

According to the complaint (PDF), Walter D. Wagner and Alexander J. Osborn traded on insider information they learned from investment banker, John W. Femenia, "about the impending acquisition of The Shaw Group Inc." Wagner has agreed to a settle the charges by "disgorging his ill-gotten gains plus interest, with any additional financial penalty to be determined by the court at a later date." Criminal charges have also been announced against Wagner. Litigation against Osbern remains pending. Femenia was previously charged in a related insider trading case and has been barred from the securities industry.

Two Previously Unknown Insider Traders in Heinz Ordered to Pay Nearly $5 Million, April 3, 2014, (Litigation Release No. 22964)

The court approved a settlement that requires Rodrigo Terpins and Michel Terpins to pay "nearly $5 million to resolve charges that they were behind suspicious trading in call options of H.J. Heinz Company the day before the company publicly announced its acquisition." The final judgments also permanently enjoin them future violations of the securities laws.

SEC Granted Summary Judgment in Insider Trading Case Against John Kinnucan and His Expert Consulting Firm, April 2, 2014, (Litigation Release No. 22963)

Final  judgments were entered against John Kinnucan and his expert consulting firm, Broadband Research Corporation for their alleged involvement in insider trading "involving expert networks." The final judgments permanently enjoin them from future violations of the securities laws, order them to pay over $6.5 million combined in disgorgement, prejudgment interest, and civil penalties.

Former Head of Investment Advisory Firm Sentenced to 63 Months Imprisonment for Conspiracy to Commit Wire Fraud and Making a False Statement to SEC Staff, April 2, 2014, (Litigation Release No. 22962)

This week Fredrick D. Scott was sentenced to 63 months imprisonment, "to be followed by three years of supervised release, and ordered...to pay $1,388,190 in restitution" for allegedly using his "status as a registered investment adviser to bolster his credibility in fraudulently offering too-good-to-be-true investment opportunities." Scott had formerly pled guilty in the case United States v. Scott to "charges of conspiracy to commit wire fraud and making a false statement to SEC staff."

District Court Enters Final Judgment Against Defendants in Broker-Dealer Registration Action, April 1, 2014, (Litigation Release No. 22961)

A final judgment has been entered against Alan Sheinwald and his investor relations firm Alliance Advisors LLC for allegedly acting "as unregistered brokers in connection with securities offerings for two companies, including China Yingxia International, Inc." The defendants have consented to the final judgment that permanently enjoins them from future violations of the securities laws, bars them from the securities industry with the right to apply for reentry after two years, bars them from participating in any offering of penny stock, and orders them to pay over $245,000 in disgorgement, prejudgment interest, and civil penalties.

District Court Enters Final Judgment Ordering Civil Penalty Against Defendant Sheldon Simon and Order Dismissing Case, April 1, 2014, (Litigation Release No. 22960)

A final judgment was entered against Sheldon Simon for allegedly violating antifraud provisions of the securities laws. The judgment permanently enjoins Simon from future violations of the securities laws and orders him to pay a civil penalty of $3,000. The judge "dismissed the Commission's claims against Simon for disgorgement and prejudgment interest, based on the parallel federal criminal case, where Simon was convicted of wire fraud and sentenced to two years of supervised release, and an order of forfeiture."

District Court Enters Judgment On the Pleadings Against Defendant Stephen F. Molinari, Final Judgment Against Defendant Nationwide Pharmassist Corp., and Order Dismissing Case, April 1, 2014, (Litigation Release No. 22959)

Final judgments were entered against Stephen F. Molinari and Nationwide Pharmassist Corp for their alleged violations of the antifraud provisions of the securities laws. The judgments permanently enjoin them from future violations, impose an officer and director bar and penny stock bar against Molinari, and order Nationwide to pay a $20,000 civil penalty. The Commission's claims against Molinari for disgorgement, prejudgment interest, and a civil penalty were dismissed "based on the parallel criminal case, where Molinari was convicted of mail fraud and sentenced to six months in prison, three years of supervised release, and restitution of $40,000."

Securities and Exchange Commission v. Ching Hwa Chen, March 31, 2014, (Litigation Release No. 22958)

Ching Hwa Chen has been charged with trading on insider information "ahead of Informatica Corporation's announcement that it would miss its quarterly earnings target based on confidential information he gleaned from his wife, a tax director at Informatica. His wife had "previously advised Chen not to trade in Informatica securities under any circumstances." Chen realized nearly $140,000 in illicit profits. Chen has agreed to a final judgment that permanently enjoins him from future violations and orders him to pay almost $280,000 in disgorgement, prejudgment interest, and civil penalties.

Securities and Exchange Commission v. Tyrone Hawk, March 31, 2014, (Litigation Release No. 22957)

The SEC charged Tyrone Hawk "with insider trading ahead of Oracle Corporation's acquisition of Acme Packet Inc. based on confidential details he learned from his wife, a finance manager at Oracle." Hawk has agreed to a judgment that permanently enjoins him from future violations of the securities laws and orders him to pay over $305,000 in disgorgement, prejudgment interest, and additional penalties.

Court Enters Final Judgments Against Defendants Adam Klein, William Keeler, and Jeffrey Richardson, March 31, 2014, (Litigation Release No. 22956)

Final judgments were entered against Adam Klein, William Keeler, and Jeffrey Richardson for their alleged role in "a massive broker bribery scheme involving the stock of nine public companies, including Syndicated Food Service International, Inc." The judgment permanently enjoins them from future violations, orders them to pay over $700,000 combined in disgorgement and penalties, and imposes a penny stock  bar and officer and director bar against Klein.

District Court Enters Default Judgment Against Defendant Redfin Network, Inc, Judgment of Permanent Injunction and Other Relief Against Defendant Jeffrey L. Schultz, and Order Dismissing Case, March 31, 2014, (Litigation Release No. 22955)

Judgments were entered against Jeffrey L. Schultz and Redfin Network, Inc.  for their alleged violations of the antifraud provisions of the securities laws. The judgments permanently enjoin them from future violations, order Redfin to pay almost $20,000  in disgorgement and prejudgment interest, and impose a penny stock bar and officer and director bar against Schultz. The SEC's claims for disgorgement, prejudgment interest, and a civil penalty were dismissed "based on the parallel federal criminal case, where Schultz was convicted of securities fraud and sentenced to six months in prison, three years of supervised release, and an order of forfeiture."

SEC Charges Four Texas Residents for Selling Fraudulent Oil and Gas Investments, March 28, 2014, (Litigation Release No. 22954)

The SEC has charged Jason A. Halek and Patrick J. Booths of "fraudulently conduct[ing] unregistered securities offerings of working interests in oil and gas projects that were owned and operated by Halek’s company, Halek Energy, LLC." Joshua D. Spivey and Steven J. Little offered these projects "through their separately incorporated companies." The SEC has charged the defendants with violations various provistions of the securities laws and seeks civil penalties, disgorgement, and prejudgment interest. Booths, Spivey, and Little have agreed to be barred from the securities industry as well as barred from participating in the offering of a penny stock and to injunctions against future violations.

SEC Halts Los Angeles- and Hong Kong-Based Pyramid Scheme Targeting Asian and Latino Communities, March 28, 2014, (Litigation Release No. 22953)

The SEC has charged three entities collectively operating under the business names WCM and WCM777 with "rais[ing] more than $65 million since March 2013 by falsely promising tens of thousands of investors that the return on investment in the cloud services venture would be 100 percent or more in 100 days." The entities, which are based "in California and Hong Kong and controlled by 'Phil' Ming Xu," have not used funds as promised but instead have "used investor funds to make Ponzi payments of purported investment returns to some investors...[and] to purchase golf courses and other U.S.-based properties among other unauthorized expenditures." The court has frozen the assets of the businesses, appointed a temporary receiver over the assets, and granted a request for an "order prohibiting the destruction of documents and requiring the defendants to provide accountings." A hearing is scheduled for April 10, 2014.


CFTC ENFORCEMENT ACTIONS

Customers of MF Global Inc. to Begin Receiving Final Restitution Payments from MF Global to Satisfy More Than $1 Billion in Customer Losses as Ordered by Federal Court in CFTC Action
, April 3, 2014, (CFTC Press Release No. 6904-14)

The CFTC has charged MF Global Inc. with  unlawfully "using customer segregated funds to support its own proprietary operations and the operations of its affiliates." The CFTC's consent Order "imposed a $100 million civil monetary penalty on MF Global, to be paid after MF Global has fully paid customers and certain other creditors entitled to priority under bankruptcy law."

Federal Court Orders Two Florida Men and Their Companies to Pay More than $3.3 Million in Restitution and Penalties to Settle Charges Stemming from Role in Illegal, Off-Exchange Precious Metals Transactions, March 31, 2014, (CFTC Press Release No. 6903-14)

Permanent injunction Orders were entered against John King and his company, Newbridge Alliance, Inc. (PDF) and David A. Moore and his company United States Capital Trust, LLC (PDF) for their role "in a multi-million dollar precious metals scheme orchestrated by Hunter Wise Commodities, LLC and related companies." The Orders require the defendants to pay over $3.3 million combined in restitution and civil penalties. "The Orders also impose permanent solicitation, trading and registration bans against King, Newbridge, Moore, and USCT, and prohibit them from further violations of the Commodity Exchange Act and CFTC regulations, as charged."

Federal Court Orders Ward Onsa of Marco Island, Florida and His Company, New Century Investment Management LLC of Southampton, Pennsylvania to Pay $5.7 Million Civil Monetary Penalty for Operating a Commodity Pool Ponzi Scheme, March 31, 2014, (CFTC Press Release No. 6902-14)

A final judgment Order (PDF) was entered against Ward Onsa and his company, New Century Investment Management LLC "imposing a civil monetary penalty of almost $6 million against them," imposing permanent trading and registration bans on them, and "prohibiting them from violating the anti-fraud provisions of the Commodity Exchange Act." The judgment stems from CFTC charges that the defendants had conducted "solicitation fraud, misappropriation, and issu[ed] false account statements to commodity pool participants while operating a commodity pool Ponzi scheme." In a related criminal case, U.S. v Ward Onsa, Onsa was sentenced to 78 months imprisonment and ordered to pay over $3.1 million in restitution to victims.

Federal Court Orders St. Augustine, Florida Couple and Their Company to Pay $5.76 Million for Defrauding Customers in Foreign Currency Scheme, March 31, 2014, (CFTC Press Release No. 6900-14)

A supplemental consent Order (PDF) was entered which requires "Gary D. Martin and Brenda K. Martin...and their company, Queen Shoals Consultants, LLC,...to jointly pay a total of $5.76 million in civil monetary penalties for defrauding customers through a retail foreign currency (forex) trading scheme." According to the CFTC, the Martins “'lured customers by claiming QSC and the Martins had a "vast background in financial services" with over 20 years of experience in financial services and a staff of experts ready to assist customers.'" However, the defendants actually "had no expertise or experience in trading forex, and all of the representations concerning trading, guaranteed profits, and profitable accounts were false." Unknown to the investors, the Martins allegedly "turned over all customer funds to Sidney S. Hanson...in return for a referral fee of up to five percent of each customer’s initial and subsequent investment." In 2009, Hanson and other defendants were charged by the CFTC "with operating a Ponzi scheme involving more than $22 million in connection with off-exchange forex trading." Hanson pled guilty to securities fraud and mail fraud in the criminal matter (United States v. Sidney Stanton Hanson)" and "was sentenced on April 1, 2011, to 22 years in prison and ordered to pay $33 million in restitution to victims of the Ponzi scheme."

Friday, March 28, 2014

Enforcement Actions: Week in Review

SEC ENFORCEMENT ACTIONS

SEC Obtains Order Enforcing Compliance with Order to Pay Over $5 Million in Disgorgement, Prejudgment Interest, and Civil Penalties
, March 26, 2014, (Litigation Release No. 22952)

An opinion and order were entered this week "directing Walter Gerasimowicz, Meditron Asset Management, LLC, and Meditron Management Group, LLC to comply with the SEC order requiring them to pay $3,143,029.41 in disgorgement and prejudgment interest, and a civil penalty of $1,950,000." The SEC had previously found that the Respondents had "willfully violated the antifraud provisions" of the securities laws.

SEC Obtains Summary Judgment Against Defendant Jonathan Curshen in Market Manipulation Case, March 26, 2014, (Litigation Release No. 22951)

A summary judgment was entered against Jonathan Curshen which permanently enjoins him from future violations of the securities laws, imposes a penny stock bar against him, orders him to pay a $65,000 civil penalty, and holds him "jointly and severally liable with Defendant Bruce Grossman for $76,000 in disgorgement, plus $18,599.86 in prejudgment interest." In 2012, a final judgment was entered against Grossman that permanently enjoins him from future violations of the securities laws and imposes a penny stock bar against him. Grossman's liability "was deemed fully satisfied by Grossman's criminal forfeiture order in United States v. Grossman."

The SEC's original complaint found that the defendants "engaged in a fraudulent broker bribery scheme designed to manipulate the market for the common stock of Industrial Biotechnology Corp."

District Court Enters Final Judgments of Permanent Injunction Against All Defendants and Orders Penny Stock and Officer and Director Bars Against Linda Grable and Allan Schwartz, March 25, 2014, (Litigation Release No. 22950)

Final judgments were entered against Imaging Diagnostic Systems, Inc., Linda Grable, its CEO, and Allan Schwartz, its CFO, that permanently enjoin them from future violations of the securities laws, and impose penny stock bars and officer and director bars against Grable and Schwartz as well as order Grable and Schwartz to each pay $150,000 civil penalties.

The SEC's original complaint found that the defendants "made material misstatements and omissions in Imaging Diagnostic's public filings about the timing of the company's Food and Drug Administration application and its failure to remit payroll taxes to the Internal Revenue Service."


CFTC ENFORCEMENT ACTIONS

CFTC Orders Morgan Stanley Smith Barney LLC to Pay $490,000 to Settle Charges Relating to Rules and Regulations Pertaining to Segregated and Secured Amount Funds, March 27, 2014, (CFTC Press Release No. 6894-14)

The CFTC has filed and settled charges against Morgan Stanley Smith Barney LLC "for violating CFTC rules governing secured funds of foreign futures and option customers, commingling customer and firm funds, failing to prepare accurate daily computations of its segregated and secured funds, failing to properly title account statements...and failing to diligently supervise its employees handling of matters." The Order (PDF) "requires MSSB to pay a $490,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act and CFTC Regulations."

CFTC Charges New York-Based SK Madison Commodities, LLC and its principals, Michael James Seward and Yan Kaziyev, with Commodity Pool Fraud and Other Violations, March 27, 2014, (CFTC Press Release No. 6892-14)

An emergency Order (PDF) has been issued that freezes and preserves "the remaining pool participant assets under the control of Michael James Seward, Yan Kaziyev, and their company SK Madison Commodities, LLC" and "freezes assets controlled by a successor company, SK Madison, LLC, prohibits Seward, Kaziyev, and SKMC from destroying books and records, and allows the CFTC immediate access to those records." The CTFC's original complaint (PDF) alleges that the defendants "fraudulently solicited more than $1.3 million from members of the public to trade futures in a commodity pool by...misrepresenting their trading practices and historical trading returns,...prepared and distributed...false account statements and performance reports showing huge profits" and "divert[ed] large amounts of pool participants’ funds for [their] own use." The CFTC seeks full restitution, disgorgement, civil penalties, permanent registration and trading bans, and a permanent injunction against the defendants.

Federal Court in North Carolina Orders Mitchell Brian Huffman to Pay $2.1 Million Penalty for Defrauding Customers of More than $3.2 Million in Commodity Pool Scheme, March 24, 2014, (CFTC Press Release No. 6891-14)

The CFTC obtained a federal court supplemental Consent Order (PDF) which requires Mitchell Brian Huffman "to pay a $2.1 million civil monetary penalty for operating a fraudulent commodity pool scheme that defrauded customers of more than $3.2 million in connection with exchange-traded commodity futures contracts." A separate Order requires Huffman "to pay $3.2 million in restitution to defrauded customers" as a part of his criminal sentencing in United States v. Mitchell Brian Huffman. A Consent Order (PDF) was entered in 2012 that "imposes permanent trading and registration bans against Huffman, prohibits him from violating federal commodities law, as charged" as well as orders him to pay the civil penalty "as provided for in the supplemental Order."

CFTC Orders Morgan Stanley Capital Group Inc. to Pay $200,000 Penalty for Violating Soybean Meal Futures Speculative Position Limits, March 24, 2014, (CFTC Press Release No. 6889-14)

Morgan Stanley has agreed to pay "a $200,000 civil monetary penalty to settle CFTC charges that it exceeded speculative position limits in soybean meal futures contracts trading on the Chicago Board of Trade ." The CTFC Order (PDF) against MSGCI also requires "MSGCI to cease and desist from further violations" of the federal commodities laws.

An Ohio Federal Court Rules against Defendants in CFTC Fraud Action and Orders Patrick Cole and Global Strategic Marketing, Inc. to Pay over $2.2 Million in Sanctions in Connection with Foreign Currency Ponzi Scheme, March 21, 2014, (CFTC Press Release No. 6887-14)

A judgment was entered against Patrick Cole and his company, Global Strategic Marketing, Inc., for allegedly committing "fraud in connection with a multi-million dollar off-exchange foreign currency Ponzi scheme." The court's Order (PDF) "imposes disgorgement of $1,146,399,...requires Cole and GSM to pay civil monetary penalties of $1,146,39,...imposes permanent trading and registration bans on Cole and GSM, and prohibits them from violating the anti-fraud provisions of the Commodity Exchange Act, as charged."

In May 2013, a judgment was entered "requiring Defendants CDL, its principals and controlling persons Kevin Harris, Keelan Harris, and Karen Starr, and Defendant Investment International Inc., to pay over $23 million in civil monetary penalties and restitution in connection with this fraudulent forex Ponzi scheme."