A New York firm and its CEO have been slapped with over $1.85 million in penalties and restitution after a federal court found them guilty of running a fraudulent forex pool. Wright Time Capital Group LLC (d/b/a Global FX Club) was ordered to pay $1,113,750 in civil monetary penalties and $371,250 in restitution on December 7, according to the Commodity Futures Trading Commission (CFTC).
The court also permanently banned the firm from trading and registering with the CFTC, and prohibited any further violations of the Commodity Exchange Act (CEA). Michael S. Wright, the firm’s CEO and a former New Jersey resident, previously agreed to a consent order in August 2018, requiring him to pay a $100,000 penalty and $400,000 in restitution, alongside similar trading and registration bans.
The CFTC’s complaint, originally filed in June 2017 in the U.S. District Court for the Southern District of New York, detailed a systematic scheme to defraud investors. WTCG and Wright allegedly misrepresented how investors’ funds would be used, claiming they would be traded in the forex market when, in reality, the money was misappropriated.
The court found the defendants issued false account statements inflating the value of investors’ holdings and hiding significant trading losses. Funds were commingled and not held in the pool participants’ names, and the operation wasn’t maintained as a separate legal entity, violating registration requirements.
Wright’s liability extends beyond the firm’s actions. The court found him responsible for knowingly inducing the violations or failing to act in good faith. This case runs parallel to a criminal prosecution where Wright pleaded guilty to one count of commodities fraud in October 2017. He was sentenced to 21 months in prison and three years of supervised release in January 2018, and ordered to pay $358,070 in restitution.
The CFTC is warning potential victims that recovering lost funds through restitution orders isn’t guaranteed, as wrongdoers may lack sufficient assets. The agency asserts its continued commitment to protecting customers and holding fraudulent actors accountable.
Source: CFTC.gov
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