DALLAS, TX – October 20, 2021 – The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Dennis Weinmann, a Dallas, Texas resident and owner of Coquest Inc., along with co-owner John Vassallo and their trading firms, Buttonwood LLC and Weva Properties Ltd. The lawsuit, filed in the U.S. District Court for the Northern District of Texas, alleges a scheme to defraud Coquest’s brokerage customers by misappropriating confidential order information.
According to the CFTC complaint, from May 2015 through November 2019, Weinmann and Vassallo illegally traded against Coquest customers without their knowledge or consent. Weinmann, acting as Coquest’s broker and owner, allegedly used accounts at Buttonwood and Weva – companies he and Vassallo controlled – to execute these trades. The complaint details how Weinmann exploited material, nonpublic information about customer buy and sell prices to benefit his own firms.
The CFTC alleges that Weinmann intentionally offered Coquest customers unfavorable prices, creating an artificial arbitrage profit that flowed to Weinmann and Vassallo at the expense of the customers. Customers were reportedly misled into believing they were trading against independent third parties when, in reality, Weinmann was trading against them directly. Vassallo is accused of knowingly participating in the scheme by brokering trades where Weinmann took the opposite side without customer consent.
The complaint further asserts that Coquest, Buttonwood, Weinmann, and Vassallo failed to implement adequate policies and procedures to prevent the misappropriation of customer information and trading against customer interests. The CFTC is seeking civil monetary penalties, disgorgement of ill-gotten gains, restitution for affected customers, trading and registration bans, and a permanent injunction to prevent further violations of the Commodity Exchange Act (CEA) and CFTC regulations. Acting Director of Enforcement Vince McGonagle emphasized the CFTC’s commitment to prosecuting those who abuse their positions of trust for personal profit.
The case is being pursued by Douglas Snodgrass, Bryan Hsueh, David Terrell, Scott Williamson, and Robert Howell of the CFTC’s Division of Enforcement.
Source: CFTC.gov
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