Joshua Wallace, of Oregon, faces permanent industry ban and significant penalties following a federal investigation into fraudulent trading practices. The U.S. Commodity Futures Trading Commission (CFTC) filed a Notice of Intent on July 11, 2013, to revoke the registrations of Wallace and his firm, System Capital, LLC, based in Oregon.
The CFTC alleges Wallace and System Capital are disqualified from CFTC registration due to a prior order issued by the U.S. District Court for the Southern District of New York on March 14, 2013. That order detailed findings of fraud, specifically that Wallace and System Capital misrepresented their trading history and assets under management to potential clients. They falsely claimed a successful track record and at least $29 million in managed funds, allegedly securing $3.5 million from at least 17 clients based on these misrepresentations.
The court also found Wallace knowingly provided false information and documents to the National Futures Association. As a result of these violations, Wallace and System Capital were each ordered to pay a $420,000 civil monetary penalty and were permanently enjoined from further violations of anti-fraud provisions of the Commodity Exchange Act.
Adding to these civil penalties, Wallace was convicted of criminal commodities fraud related to the same activities on November 27, 2012, by the U.S. District Court for the Southern District of New York. On May 15, 2013, he was sentenced to 27 months in prison. The CFTC’s action seeks to permanently bar Wallace and System Capital from participating in the commodities market.
The investigation was led by CFTC staff members including Mark A. Picard, Elizabeth C. Brennan, Philip Rix, Steven Ringer, Lenel Hickson, Jr., Stephen J. Obie, and Vincent A. McGonagle.
Source: CFTC.gov
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