SAN FRANCISCO, CA – June 18, 2019 – 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 issued a Supplemental Order on June 5, 2019, cementing the ban, which prevents Crombie from personally trading or having others trade on his behalf.
The case originated in September 2011 when the CFTC filed a complaint alleging Crombie made false statements and provided false documents to the National Futures Association (NFA) while soliciting funds from his company, Paron Capital Management, LLC. In July 2013, the District Court granted the CFTC’s motion for summary judgment on all counts, followed by a judgment in November 2013 imposing a permanent injunction, restitution, and civil monetary penalties.
Crombie appealed the rulings, but the U.S. Court of Appeals for the Ninth Circuit largely affirmed the District Court’s decisions on February 1, 2019. The Ninth Circuit found that while the lower court initially misapplied the legal standard for “willfulness,” Crombie’s actions met the standard even under a stricter interpretation. The appeals court upheld findings that Crombie violated multiple sections of the Commodity Exchange Act.
However, the Ninth Circuit remanded the personal trading ban provisions of the injunction back to the District Court for further clarification. The District Court, upon remand, explicitly imposed the permanent personal trading ban requested by the CFTC, citing Crombie’s “egregious and willful fraudulent conduct” as evidence that future violations were likely. The court dismissed Crombie’s arguments that the ban was overly broad, as it wasn’t based on misappropriation of client funds, and that it was unnecessary.
The specifics of the restitution and civil monetary penalties were not detailed in the CFTC release, but the order definitively bars Crombie from participating in CFTC-regulated markets in any capacity.
Source: CFTC.gov
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