Peter Kambolin, Trade Allocation Fraud, Florida 2023

SUNNY ISLES BEACH, FL – Peter Kambolin, owner of Systematic Alpha Management, LLC (SAM), is facing charges of trade allocation fraud following a complaint filed by the Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Southern District of Florida. The complaint alleges Kambolin and SAM unfairly allocated trades between customer accounts and their own proprietary accounts, resulting in at least $1,451,559 in illicit profits.

According to the CFTC, Kambolin, operating out of Sunny Isles Beach, Florida, presented SAM as a commodity trading advisor (CTA) and commodity pool operator (CPO) offering algorithm-based futures trading strategies. Between January 2019 and November 2021, SAM managed two commodity pools – one focused on cryptocurrency futures and another on foreign exchange (FX) futures – and at least four individual managed accounts. The alleged scheme involved combining trades for all accounts and then selectively allocating profitable trades to SAM’s proprietary accounts while assigning losing or less profitable trades to customers.

The CFTC alleges that Kambolin misrepresented the fairness of trade allocation to pool participants and managed account customers. Director of Enforcement Ian McGinley stated the defendants “promised customers investment opportunities would be allocated fairly and equitably… In reality, the defendants took most of the profits and gave the losses to their customers.”

On April 24, Judge Robert N. Scola, Jr. issued a statutory restraining order, freezing the defendants’ assets and allowing the CFTC access to their records. A preliminary injunction hearing is scheduled for May 8. The CFTC is seeking monetary penalties, disgorgement of ill-gotten gains, restitution for harmed customers, trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and related regulations.

The investigation highlights the CFTC’s use of data analysis to identify and prosecute misconduct in the commodities market. The agency emphasizes its commitment to pursuing advisors who defraud customers for personal gain.

Source: CFTC.gov

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