BOCA RATON, FL – The U.S. Commodity Futures Trading Commission (CFTC) announced a settlement on September 24, 2013, against Newbridge Metals, LLC, for conducting illegal off-exchange precious metals transactions. While the charges were leveled against the company, the scheme involved soliciting retail customers with false pretenses.
The CFTC order mandates Newbridge to pay $1,517,930.66 in restitution to affected customers. Furthermore, the firm is subject to permanent bans from registration and trading, and is required to cease all violations of Section 4(a) of the Commodity Exchange Act.
The investigation revealed that from February 2012 through February 2013, Newbridge solicited retail customers to engage in financed precious metals purchases. Telemarketers allegedly told customers they could buy desired quantities of precious metals with a 25% deposit, borrowing the remaining 75% with associated finance charges, service fees, and commissions capped at 15%.
Customers who agreed to these terms sent funds to Newbridge, which then transferred them to Hunter Wise Commodities, LLC. Hunter Wise would remit a portion of the commissions and fees back to Newbridge, resulting in a total of $1,517,930.66 in earnings for Newbridge. However, the CFTC found that neither Newbridge nor Hunter Wise ever purchased, sold, loaned, stored, or transferred any physical metals. No precious metals were ever delivered to customers.
Because the transactions were conducted off-exchange, they were deemed illegal by the CFTC. The agency previously filed a lawsuit against Hunter Wise in federal court in Florida on December 5, 2012, alleging similar illegal practices, fraud, and other violations. A preliminary injunction was granted on February 25, 2013, freezing Hunter Wise’s assets and appointing a corporate monitor.
The case was led by CFTC staff members Ken Koh, Todd Kelly, John Einstman, and Paul G. Hayeck.
Source: CFTC.gov
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