Oshkosh, WI – October 7, 2020 – Timothy A. Sack, the sole managing member of Southwest Services, L.L.C., faces charges of forex fraud following a civil enforcement action filed by the Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Eastern District of Wisconsin. The complaint, filed today, alleges a pattern of unregistered activity and violations of key CFTC regulations.
According to the CFTC, Southwest Services, operating also as South West Services, LLC, offered and entered into retail foreign currency transactions – specifically financed forex derivatives – with U.S. customers between August 2016 and April 2018 without being properly registered as a retail foreign exchange dealer (RFED). These transactions involved currencies like Vietnamese Dong and Iraqi Dinar and did not adhere to the required two-day delivery timeframe for forex.
The complaint details three primary violations: failure to register as an RFED, failure to provide mandatory written risk disclosures to customers, and failure to maintain accurate books and records as required by CFTC regulations. Sack is also personally charged with failing to register as an associated person of an RFED and is held liable for the firm’s regulatory breaches as its controlling member.
The CFTC alleges that Southwest Services actively solicited customers through its website, YouTube videos, and direct, in-person appeals. Sack, responsible for the website’s content and the overall operation of the company, allegedly oversaw these unregistered transactions.
While the CFTC’s press release doesn’t specify the exact financial penalties sought, the agency emphasizes the importance of verifying a company’s registration status before investing. Customers are encouraged to utilize the NFA BASIC system to check a firm’s registration.
The case is being pursued by the CFTC’s Division of Enforcement, with Timothy J. Mulreany, Kassra Goudarzi, George Malas, Hillary Van Tassel, and Paul G. Hayeck leading the investigation.
Source: CFTC.gov
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