Howard Winell of New York faces severe penalties following a settlement with the U.S. Commodity Futures Trading Commission (CFTC) for fraud and misappropriation of funds. The CFTC filed and settled charges against Winell, along with his companies Winell Associates, Inc. and Maxie Partners GP, LLC, on May 2, 2011.
The investigation revealed that beginning in 2005, Winell and his associates solicited approximately $20 million from around 25 investors to trade commodity futures and options through a pool named Maxie Partners LP. In May 2007, a significant investor requested a $7 million redemption of their funds.
While the $7 million was initially segregated to fulfill the redemption request, the pool experienced substantial losses and received margin calls totaling approximately $4 million from futures commission merchants. Instead of honoring the redemption, Winell allegedly transferred the $7 million in segregated funds back into the pool’s trading accounts to cover the margin calls and continue trading. This maneuver ultimately resulted in the loss of approximately $3.8 million of the investor’s funds.
The CFTC order mandates that Winell, Winell Associates, Inc., and Maxie Partners GP, LLC, jointly and severally pay restitution totaling $3,740,277.37. Additionally, a $1.5 million civil monetary penalty has been levied against them. The order also permanently prohibits Winell and his companies from engaging in any future trading activities, with a limited exception, and permanently bars them from registering with the CFTC.
The case was led by CFTC Division of Enforcement staff members Timothy M. Kirby, Kevin K. Batteh, Gretchen L. Lowe, and Vincent A. McGonagle.
Source: CFTC.gov
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