Pompano Beach, Florida resident Ted L. Romeo, along with Cypress Wealth Management, Inc., and Richard D. Schrutt of Tampa, Florida, have been charged by the Commodity Futures Trading Commission (CFTC) with illegally offering off-exchange financed transactions in precious metals to retail customers and failing to register as a Futures Commission Merchant (FCM). The charges stem from activity between January 2012 and at least March 2013.
The CFTC order requires Romeo, Schrutt, and Cypress Wealth Management to jointly pay $330,764.29 in restitution to affected customers. Additionally, a $100,000 civil monetary penalty will be levied against all three respondents, with Romeo facing an additional $100,000 penalty. The order also mandates a cease and desist from further violations of the Commodity Exchange Act and prohibits them from trading through registered entities.
According to the CFTC, the respondents solicited retail customers into leveraged, off-exchange precious metals transactions. Customers paid a portion of the purchase price and received financing for the remainder, while also paying commissions and fees. These financed, off-exchange transactions with retail customers are prohibited under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requiring such transactions to be executed on or subject to the rules of a CFTC-designated contract market.
The CFTC further alleges that Cypress Wealth Management acted as an unregistered FCM by soliciting orders and accepting funds for the financed precious metals transactions. Romeo and Schrutt, as controlling persons of the company, are also liable for the failure to register.
The CFTC advises that restitution orders do not guarantee full recovery of lost funds, as wrongdoers may lack sufficient assets. The agency states it will continue to pursue enforcement actions to protect customers and hold accountable those who violate the Commodity Exchange Act. The case was handled by CFTC staff members Laura Brookover, Michael Loconte, Alison B. Wilson, and Rick Glaser.
The CFTC has issued fraud advisories, including a specific Precious Metals Fraud Advisory, to educate customers about potential scams and warning signs.
Source: CFTC.gov
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