Chicago, IL – January 13, 2016 – Nikolai S. Battoo has been ordered to pay $489,246,741.63 in restitution and penalties following a default judgment entered by Judge Edmond E. Chang of the U.S. District Court for the Northern District of Illinois. The judgment, issued January 11, 2016, stems from a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) in September 2012.
Battoo, along with BC Capital Group S.A., BC Capital Group International Limited, and BC Capital Group Holdings S.A. (collectively, the BC Common Enterprise), was found to have engaged in fraudulent misrepresentations and omissions related to significant losses suffered by the Private International Wealth Management (PIWM) commodity pools. These misrepresentations were made through account statements, asset verification documents, and direct communication with pool participants.
The court found that Battoo committed fraud in 2008 by concealing the PIWM pools’ substantial exposure to the Bernard Madoff Ponzi scheme, as well as trading losses within other hedge funds in which the PIWM pools had invested. In 2009, the defendants allegedly overstated the value of the PIWM pools’ investments in asset verifications sent to participants. Further, in 2011, the court determined that the defendants exaggerated the impact of MF Global, Inc.’s bankruptcy to avoid returning funds to pool participants.
The total penalty includes $294,246,741.63 in restitution to victims, a $147 million civil monetary penalty, and the disgorgement of $49 million in ill-gotten gains received by Battoo. The Order also permanently bans Battoo and the BC Common Enterprise from trading and registering with the CFTC, and prohibits further violations of the Commodity Exchange Act and related regulations.
The CFTC acknowledged the assistance of the U.S. Securities and Exchange Commission in the investigation. The agency cautioned victims that full recovery of lost funds is not guaranteed, as wrongdoers may lack sufficient assets. The CFTC will continue to pursue accountability in cases of commodity fraud.
Source: CFTC.gov
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