NEW YORK, NY – Susan G. Davis of Jersey City, N.J., along with David E. Howard II of New York, N.Y., and Joseph Burgos of Rutherford, N.J., have been hit with hefty penalties and trading bans following a CFTC enforcement action, officials announced February 28, 2014. The U.S. Commodity Futures Trading Commission secured consent orders from Judge Katherine B. Forrest of the U.S. District Court for the Southern District of New York, permanently barring Davis and Howard from trading and registration, and assessing significant financial penalties.
Burgos previously received a permanent injunction on October 29, 2013, which included trading and registration bans. The latest orders require Davis, Howard, and Burgos to jointly pay $407,599.87 in restitution to defrauded customers and a $500,000 civil monetary penalty. Davis’ and Howard’s liability for the penalty is capped at $250,000 each.
The case originated from a July 27, 2011, CFTC complaint against Forex Capital Trading Group, Inc., Forex Capital Trading Partners, Inc., and Highland Stone Capital Management, L.L.C. The three companies had already been subject to a default judgment in November 2012, ordering them to pay $450,764 in restitution and a $1,352,293 civil monetary penalty.
According to court findings, Davis, Howard, and Burgos fraudulently solicited 106 customers, who invested nearly $2.9 million in foreign currency (forex) trading accounts managed by the defendants. They falsely claimed years of customer profits, including a reported 51.94 percent gain in 2010, while customers actually lost over $1.2 million that year. Ultimately, customers lost over 93 percent of their invested principal. The defendants also distributed falsified account statements to attract prospective investors.
The CFTC noted that Davis, Howard, and Burgos were acting in capacities requiring registration with the agency but failed to register. The agency acknowledged assistance from the U.K.’s Financial Conduct Authority in the investigation.
The case was led by CFTC staff members Susan B. Padove, Joy McCormack, Elizabeth Streit, Michael Geiser, Janine Gargiulo, Scott Williamson, Rosemary Hollinger, and Richard B. Wagner.
Source: CFTC.gov
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