Muscle Shoals, Alabama – A federal judge has issued a default judgment against Negus Capital Incorporated (NCI) and its owner, Aaron B. Butler, for fraudulent solicitation, misappropriation, and registration violations related to binary options trading. Judge Liles C. Burke of the U.S. District Court for the Northern District of Alabama ordered NCI to pay $294,545 in restitution to defrauded customers and a civil penalty of $883,635 on March 31, 2021.
The judgment also permanently prohibits NCI from violating the Commodity Exchange Act and CFTC regulations, as well as from registering with the CFTC or trading on any CFTC-regulated markets. This order stems from a 2019 enforcement action brought by the Commodity Futures Trading Commission (CFTC).
According to the court findings, from March 16, 2017, to February 21, 2018, NCI, under Butler’s direction, fraudulently solicited $294,545 from 70 individuals to trade binary options contracts on the North American Derivatives Exchange (Nadex). The company operated as an unregistered commodity pool operator and misrepresented how customer funds would be used.
NCI promised customers who deposited between $500 and $5,000 that their funds would be pooled into a single Nadex account and traded on their behalf by Butler. Deposits of $5,000 or more were allegedly to be placed in separate accounts and managed individually. However, the court found that Butler largely misappropriated the funds for personal expenses, including jewelry, Apple purchases, and Toys “R” Us gift cards.
Butler was previously enjoined and ordered to pay $755,000 in restitution and penalties in a related order. The CFTC notes that restitution orders do not guarantee victims will recover their losses, as wrongdoers may lack sufficient assets.
The CFTC acknowledged the assistance of the Alabama Securities Commission in this investigation. The case was led by CFTC staff members James Deacon, Kevin Samuel, Erica Bodin, and Rick Glaser.
Source: CFTC.gov
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