SAN FRANCISCO – James D. Crombie has been permanently banned from trading on CFTC-regulated markets following a protracted legal battle with the Commodity Futures Trading Commission (CFTC). The U.S. District Court for the Northern District of California entered a Supplemental Order on June 5, 2019, solidifying the ban, which prevents Crombie from personally trading or having trades executed on his behalf.
The case originated with a CFTC complaint filed in September 2011, alleging Crombie made false statements and provided falsified documents to the National Futures Association (NFA) while soliciting funds through his company, Paron Capital Management, LLC. In July 2013, the District Court granted the CFTC’s motion for summary judgment, finding Crombie liable on all counts. A subsequent order in November 2013 imposed a permanent injunction, restitution, and civil penalties.
Crombie appealed, but the U.S. Court of Appeals for the Ninth Circuit largely upheld the lower court’s decision on February 1, 2019. While the Ninth Circuit found the District Court initially applied an incorrect legal standard regarding “willfulness,” it affirmed the summary judgment, stating Crombie acted “willfully” even under a stricter interpretation. The appeals court also supported the lower court’s findings that Crombie violated Sections 4b and 4o of the Commodity Exchange Act.
The Ninth Circuit remanded only the provisions of the permanent injunction concerning the personal trading ban, requesting further explanation from the District Court. Upon remand, the court found that Crombie’s past “egregious and willful fraudulent conduct” indicated a high likelihood of future violations. The court explicitly rejected arguments that the ban was overly broad, noting that a trading prohibition was necessary to prevent Crombie from potentially utilizing false statements and documents to solicit funds through personal accounts.
The CFTC pursued the case, seeking to prevent future fraudulent activity by Crombie. The specific amount of restitution and civil penalties were not detailed in this release, but were previously established in the 2013 judgment.
Source: CFTC.gov
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