James J. Zhou, of Alhambra, California, has been ordered to pay $177,135.96 in penalties and restitution for defrauding investors through his company, Jade Trader. The U.S. Commodity Futures Trading Commission (CFTC) announced the settlement on June 16, 2008, following a complaint filed in October 2004.
According to court documents filed in the United States District Court for the Central District of California, Zhou and Jade Trader fraudulently solicited funds from the public via the website www.jadetrader.net between October 11, 2002, and October 5, 2004. They offered to trade commodity futures contracts using a system called the Jade Trader Day Trade System (Jade Trader DTS).
The CFTC alleged that the website displayed falsified trading results designed to create the illusion of profitable trading. Defendants claimed a $63,975 profit for a single E-mini contract in 2003, while client accounts actually incurred $127,135.96 in losses during that period. Furthermore, the website advertised trading frequency of “2 to about 12 times per day,” but one client account experienced 89 trades in a single day, demonstrating a significantly higher and riskier trading pace.
The consent order requires Zhou and Jade Trader to pay $127,135.96 in restitution to defrauded investors and a $50,000 civil monetary penalty. Additionally, both Zhou and Jade Trader are permanently banned from all commodity-related activities, including trading for others and soliciting funds for commodity trading. They are also barred from registering with the CFTC or associating with any registered entity.
The case was led by CFTC Division of Enforcement staff William Small, Elizabeth Padgett, Lacey Dingman, Rick Glaser, and Richard Wagner.
Source: CFTC.gov
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