New York, NY – January 24, 2014 – Stephen Craig Symons of Corona del Mar, California, along with James David Kline of Van Nuys, California, and their companies CTI Group, LLC and Cooper Trading, have been penalized by the U.S. Commodity Futures Trading Commission (CFTC) for engaging in fraudulent sales practices related to automated trading systems. The case, originating from a complaint filed in May 2012, centers around the Boomer and Victory Trading Systems used for trading E-mini S&P 500 futures contracts.
Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York issued a Consent Order on January 22, 2014, outlining the penalties. Symons is required to pay over $3.150 million in disgorgement and a $4.5 million civil monetary penalty. Kline must pay over $275,000 in disgorgement and a $1 million civil monetary penalty. The corporate entities, CTI Group and Cooper Trading, face a combined penalty of $10.175 million in disgorgement and a $10 million civil monetary penalty.
The CFTC alleged that since at least August 2009, CTI and its employees made false and misleading statements to clients regarding several key aspects of their business and trading systems. These included misrepresentations about the company’s history, experience, personnel (who used aliases), the performance history of the Trading Systems, associated transaction costs, and the inherent risks of futures trading.
Specifically, CTI salespeople, including Kline, falsely advertised a money-back guarantee. The court found that Symons and Kline were liable for the fraudulent activities due to their control over CTI and active participation in the scheme. Funds transferred to related companies, Snonys, Inc. and Dragonfyre Magick Incorporated, were also subject to disgorgement as these entities were deemed to have improperly benefited from the fraudulent conduct.
The Order imposes permanent trading and registration bans on all defendants, prohibiting them from violating anti-fraud and disclosure provisions of the Commodity Exchange Act (CEA) and CFTC regulations. The CFTC acknowledged the assistance of the National Futures Association in the investigation. The case was led by CFTC staff members R. Stephen Painter, Jr., Michael C. McLaughlin, David W. MacGregor, Lenel Hickson, Jr., and Manal M. Sultan.
Source: CFTC.gov
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