Madison, WI – Edward S. Walczak was found liable for investment fraud by a jury in the U.S. District Court for the Western District of Wisconsin on April 15, 2022, following a five-day trial. The Commodity Futures Trading Commission (CFTC) brought the action against Walczak on January 27, 2020, alleging he misrepresented risk management practices within the Catalyst Hedged Futures Strategy Fund.
The jury determined Walczak engaged in conduct constituting fraud or deceit upon investors, potential investors, or investment advisors, violating Section 4o(1)(B) of the Commodity Exchange Act (CEA). However, the jury found Walczak not liable for other charges including violations of CEA Sections 4o(1)(A) and 6(c)(1), as well as CFTC Regulation 180.1.
The CFTC’s investigation focused on claims that Walczak misrepresented how risk was managed within the Catalyst fund. While specific financial penalties have not yet been determined, further proceedings will be scheduled to address sanctions. Acting Director of Enforcement Vincent McGonagle emphasized the importance of accurate disclosures to investors, stating the CFTC is “committed to holding accountable individuals that misstate the risks of investing in their products.”
Notably, the CFTC consolidated its case with a parallel action brought by the Securities and Exchange Commission (SEC) against Walczak, addressing the same underlying conduct. The CFTC acknowledged and thanked the SEC and its staff for their collaboration throughout the consolidated trial. The CFTC’s enforcement team included Sam Wasserman, Peter Janowski, Meredith Borner, David Acevedo, Michael Cazakoff, John Buffington, Shantel Ogbuagu, Shelley Evans, and former staff member Candice Aloisi, with assistance from trial technician Dawn Miller.
The outcome of this case underscores the CFTC’s commitment to policing fraudulent activity within the commodity futures and investment markets.
Source: CFTC.gov
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