Dallas, TX – The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Dennis Weinmann, John Vassallo, and their companies Coquest Inc., Buttonwood LLC, and Weva Properties Ltd., all based in Dallas, Texas. 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 trading on confidential order information.
According to the CFTC complaint, from May 2015 through November 2019, Weinmann, acting as Coquest’s broker and owner, allegedly traded on the opposite side of customer orders using accounts held at Buttonwood and Weva – firms he and Vassallo controlled. This occurred without the customers’ knowledge or consent.
The charges center around the misappropriation of block trade order information. Weinmann is accused of using material, nonpublic information regarding customer buy and sell prices to execute trades for Buttonwood and Weva’s benefit. The complaint further alleges that Weinmann intentionally offered unfavorable prices to Coquest customers to generate “arbitrage” profits for himself and Vassallo, directly at the expense of those customers.
The CFTC alleges Weinmann misled customers, creating the false impression they were negotiating with third parties when, in reality, he was trading against them. Vassallo is accused of knowingly participating in the scheme by brokering trades where Weinmann took the opposing side without securing customer consent. Both Coquest, Buttonwood, Weinmann and Vassallo are also charged with failing to implement adequate supervisory policies to prevent the misuse of customer information and trading against their interests.
The CFTC is seeking civil monetary penalties, disgorgement of ill-gotten gains, restitution for harmed customers, trading and registration bans, and a permanent injunction to prevent further violations of the Commodity Exchange Act (CEA) and CFTC regulations. The investigation was led by CFTC staff members Douglas Snodgrass, Bryan Hsueh, David Terrell, Scott Williamson, and Robert Howell.
Source: CFTC.gov
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