Joshua Wallace, of Lake Oswego, Oregon, has been slapped with a hefty penalty and trading ban following a default judgment entered by Judge Katherine B. Forrest of the U.S. District Court for the Southern District of New York on March 20, 2013.
Wallace, founder and president of System Capital, LLC, was ordered to pay a $420,000 civil monetary penalty, alongside his company, also assessed the same amount. Both Wallace and System Capital are permanently banned from trading and registering with the CFTC.
The judgment stems from a CFTC complaint filed November 23, 2010, alleging solicitation fraud related to the trading of E-Mini S&P 500 futures contracts and false statements made to the National Futures Association (NFA). The CFTC found that Wallace and System Capital falsely claimed a successful trading history and boasted assets of at least $29 million under management to attract clients.
As a result of these misrepresentations, System Capital managed approximately $3.5 million in client funds from at least 17 individuals, directing their commodity futures trading. The court also found Wallace knowingly provided false information to the NFA, including a falsified Disclosure Document and forged reports regarding the company’s trading history.
This CFTC action is compounded by Wallace’s recent guilty plea on November 27, 2012, to criminal commodities fraud in a separate case (United States v. Joshua Wallace, No. S1 11 Cr. 124). Sentencing in the criminal case is scheduled for April 18, 2013.
The CFTC acknowledged the assistance of the NFA, the Federal Bureau of Investigation, and the U.S. Attorney’s Office for the Southern District of New York in the investigation.
Source: CFTC.gov
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