Securities Industry Commentator by Bill Singer Esq

FINRA Fines and Suspends Barclays Analyst For Undisclosed Employment Offer (BrokeAndBroker.com Blog)

SEC Obtains Final Judgment Against Defendants in Stock Research Scheme (SEC Release)

U.S. Attorney Announces Extradition Of Australian Tech Entrepreneur In Multimillion-Dollar Text-Messaging Consumer Fraud Scheme / Indictment Alleges Scheme to Fraudulently Charge Hundreds of Thousands of Mobile Phone Customers for Text-Messaging Services Without Their Knowledge or Consent (DOJ Release)

Remediation Helps Tech Company Avoid Penalties / SEC's fraud case against Silicon Valley-based HeadSpin, Inc.'s former CEO is ongoing (SEC Release)

2Cir Reverses LIBOR Judgments for Insufficient Evidence

United States of America, Appellee-Cross-Appellant, v. Matthew Connolly and Gavin Campbell Black, Defendants-Appellants-Cross-Appellees (United States Court of Appeals for the Second Circuit, 19-CR-3806 / January 27, 2022)

CFTC Charges Five Entities and Five Individuals with $58 Million Foreign Currency Fraud and Misappropriation Scheme (CFTC Release)

New York Stock Promoter Sentenced to Prison for "Pump and Dump" Securities Fraud Scheme (DOJ Release)

SEC Reopens Comment Period for Pay Versus Performance (SEC Release)

Measuring Pay Against Performance: Are Shareholders Getting Their Money's Worth? by SEC Commissioner Allison Herren Lee

Statement on the Reopening of Pay vs. Performance by SEC Commissioner Caroline A. Crenshaw

Dissenting Statement on Reopening of Comment Period for Pay Versus Performance by SEC Commissioner Hester M. Peirce

CFTC Orders Two Florida Men to Pay $280,000 for Registration and Reporting Violations (CFTC Release)

JP Morgan Securities' Regional Director's Affidavit Fails to Carry Day in TRO for Impermissible Solicitation (BrokeAndBroker.com Blog)

FINRA Fines and Suspends Rep Over Undisclosed Elderly Widow's Will Bequest 

(BrokeAndBroker.com Blog)

[A]jay and Amit Tandon, through their stock research firm, SeeThruEquity, LLC, prepared and published purportedly "unbiased" and "not paid for" research reports on hundreds of publicly traded small and microcap companies. The defendants represented that the published reports contained price targets which were objectively determined and that they followed "customary internal trading restrictions" in connection with those reports. As alleged in the SEC's complaint, however, the defendants (a) received compensation for the research reports through camouflaged fees the companies paid to the defendants to present at investor conferences and (b) frequently manipulated the price targets in the research reports. The SEC also alleged that Ajay Tandon, who served as CEO of SeeThruEquity, LLC, frequently engaged in scalping, a form of securities fraud that occurs when a perpetrator makes a stock recommendation to investors and contemporaneously trades against that very recommendation in the open market without adequate disclosure.

From at least in or about 2012 through in or about 2013, TSVETNENKO, Wedd, Thompson, and others engaged in a multimillion-dollar scheme to defraud consumers by placing unauthorized charges for premium text messaging services on consumers' cellular phone bills through a practice known as auto-subscribing.  TSVETNENKO owned and operated several content provider companies and mobile industry companies in Australia that, among other things, created and sold premium text messaging content to consumers.  Wedd operated Mobile Messenger, a U.S. aggregation company in the mobile phone industry that served as a middleman between content providers (such as some of TSVETNENKO's companies) and mobile phone carriers.  Mobile Messenger was responsible for assembling monthly charges incurred by a particular mobile phone customer for premium text-messaging services and placing those charges on that customer's cellular phone bill.     

Beginning in or about early 2012, Wedd, Thompson, who was the Senior Vice President of Strategic Operations for Mobile Messenger, and two other senior executives of Mobile Messenger (CC-3 and CC-4) recruited TSVETNENKO to their auto-subscribing scheme to increase revenues at Mobile Messenger.  TSVETNENKO agreed and established two new content providers based in Australia, CF Enterprises and DigiMobi, to auto-subscribe on Mobile

Messenger's aggregation platform.  CC-3 furnished lists of phone numbers to TSVETNENKO, along with an auto-subscribing  "playbook," which provided TSVETNENKO with guidance on how to auto-subscribe without being caught.  The "playbook" described how to conceal the fraud scheme by making it appear as if the customers had, in fact, elected to purchase the text-messaging services, when in truth they had not.

The consumers who received the unsolicited text messages typically ignored or deleted the messages, often believing them to be spam.  Regardless, the consumers were billed for the receipt of the messages, at a rate of $9.99 per month, through charges that typically appeared on the consumers' cellular telephone bills in an abbreviated and confusing form, such as with nonsensical billing descriptors that often consisted of random letter and numbers.  The $9.99 charges recurred each month unless and until consumers noticed the charges and took action to unsubscribe.  Even then, consumers' attempts to dispute the charges and obtain refunds from CF Enterprises or DigiMobi were often unsuccessful.  Wedd, to whom CC-3, CC-4, and Thompson all reported, oversaw the scheme at Mobile Messenger.

TSVETNENKO, with the assistance of Wedd, Thompson, CC-3, and CC-4, started auto-subscribing consumers in approximately April of 2012.  TSVETNENKO's auto-subscribing activities, which continued into 2013, victimized hundreds of thousands of mobile phone customers, who were auto-subscribed through Mobile Messenger and charged a total of approximately $41,389,725 for unwanted text messaging services.  Wedd, Thompson, CC-3, and CC-4 agreed that TSVETNENKO would keep approximately 70% of the auto-subscribing proceeds generated by CF Enterprises and DigiMobi, and that the remaining 30% of the auto-subscribing proceeds would be divided evenly among Wedd, Thompson, CC-3, and CC-4.

After obtaining proceeds of the fraud scheme, TSVETNENKO worked with other co-conspirators to launder the proceeds.  TSVETNENKO and his co-conspirators distributed the proceeds of the fraud scheme among themselves and others involved in the scheme by, among other things, causing funds to be transferred through the bank accounts of a series of shell companies and companies held in the names of third parties.  This was done to conceal the nature and source of the payments and TSVETNENKO and his co-conspirators' participation in the fraud.

Through their successful orchestration of this fraud scheme, TSVETNENKO and his co-conspirators generated more than $20 million in fraud proceeds for themselves.  TSVETNENKO personally retained approximately $15.4 million in fraud proceeds for his role in the scheme.

"For companies wondering what types of remedial actions and cooperation might be credited by the Commission after a company uncovers fraud, this case offers an excellent example," said Gurbir S. Grewal, Director of the SEC's Division of Enforcement. "HeadSpin's remediation and cooperation included not just its internal investigation and revised valuation, but also repaying harmed investors and improving its governance-all of which were factors that counseled against the imposition of a penalty in this case."  

The SEC's complaint, filed in the U.S. District Court for the Northern District of California, alleges that from at least 2018 through 2020, HeadSpin, through its former CEO Manish Lachwani, engaged in a fraudulent scheme to propel the Silicon Valley-based company's valuation to over $1 billion by falsely inflating its key financial metrics and doctoring internal sales records.

According to the complaint, Lachwani controlled all important aspects of HeadSpin's financials and sales operations, significantly inflated the value of numerous customer deals, and concealed this inflation by creating fake invoices and altering real invoices to make it appear as though customers had been billed higher amounts. Lachwani's fraud unraveled after the company's Board of Directors conducted an internal investigation which led to the CEO's removal, a revised valuation down to $300 million, and remedial efforts including repaying investors.

HeadSpin's remedial actions also included hiring new senior management, expanding its board, and instituting processes and procedures designed to ensure transparency and accuracy of deal reporting and associated revenues.

Appeals from judgments entered in the United States District Court for the Southern District of New York following a jury trial before Colleen McMahon, then-Chief Judge, convicting defendants of wire fraud in violation of 18 U.S.C. § 1343 and conspiracy to commit wire fraud and bank fraud in violation of 18 U.S.C. § 1349,  in connection with the London Interbank Offered Rate ("LIBOR"), and sentencing  them principally to time-served and supervised release, including various periods in home confinement, and imposing monetary fines. On appeal, defendants contend principally that the trial evidence was insufficient to prove the falsity, materiality, or fraudulent intent elements of the offenses of which they were convicted.

Cross-appeals by the government to challenge the sentences imposed, contending principally that the district court failed to determine the availability of adequate monitoring for one defendant's home confinement and that that failure could result in punishment inadequate to reflect the court's assessment of the defendants' relative culpability. 

Finding that the evidence was insufficient as a matter of law to permit 16 a finding of falsity, we reverse the judgments of conviction and remand to the district 17 court for entry of judgments of acquittal. The government's cross-appeals with regard 18 to sentencing are thus moot.

Judgments reversed; cross-appeals dismissed as moot.

In sum, the government sought to prove falsity on the premise that the BBA LIBOR Instruction required DB to submit a particular interest rate, that such a rate was generated automatically by a DB pricer, and that LIBOR submissions that were influenced by requests from DB derivatives traders were false because those submissions were not the numbers automatically generated by the pricer. However, - the government's main fact witnesses at trial, the LIBOR submitters, testified that there were numerous ways in which the pricer did not generate such numbers automatically because those witnesses regularly altered pricer data and spreads manually; that the LIBOR submitters regularly deviated from the pricer output--even as affected by the submitters' manual adjustments--in order to make LIBOR submissions that reflected interest rate estimates they had received from independent brokers; and that the LIBOR submitters engaged in all of these practices even on days when they had no requests from DB derivatives traders.

The government failed to produce any evidence that any DB LIBOR submissions that were influenced by the bank's derivatives traders were not rates at which DB could request, receive offers, and accept loans in DB's typical loan amounts; hence the government failed to show that any of the trader-influenced submissions were false, fraudulent, or misleading. While defendants' efforts to take advantage of  DB's position as a LIBOR panel contributor in order to affect the outcome of contracts to which DB had already agreed may have violated any reasonable notion of fairness, the government's failure to prove that the LIBOR submissions did not comply with the BBA LIBOR Instruction and were false or misleading means it failed to prove conduct that was within the scope of the statute prohibiting wire fraud schemes.

[D]efendants did business as ROFX and acted through ROFX's website, ROFX.net, which solicited and obtained customers on defendants' behalf and falsely claimed to trade forex utilizing a highly successful automated trading robot with guaranteed coverage of losses. According to the complaint, over 1,100 customers opened trading accounts through the ROFX website and deposited funds via checks or wires to bank accounts in the name of one or more of the companies, all controlled by the individual defendants. 

As alleged, the defendants received at least $58 million from customers during the relevant period, all of which the defendants misappropriated by wiring to non-trading corporate entities in Poland, Thailand, and elsewhere, as well as to the individual defendants themselves. The complaint also alleges that the companies acted as futures commission merchants by doing business as ROFX, soliciting or accepting orders for retail forex transactions via the ROFX website, and accepting funds in or in connection with such transactions without being registered with the CFTC.    

The CFTC cautions victims that restitution orders may not result in the recovery of money lost, because the wrongdoers may not have sufficient funds or assets. 

[R]ajkaran and his co-defendants carried out the scheme by obtaining hundreds of thousands or even millions of shares of stock in dormant public shell companies that traded over-the-counter at low prices, often for less than a fraction of a penny per share. Rajkaran and his co-defendants then assumed control over the shell companies by creating and filing fake resignation letters and board resolutions purporting to announce the resignation of the existing management team and the appointment of one or more conspirators as new officers and directors of the companies. Rajkaran and his co-defendants used their control over the hijacked shell companies to issue fraudulent press releases and filings designed to fraudulently "pump up" the price of the hijacked companies' stock. Rajkaran and his co-defendants then "dumped" their stock by selling at the fraudulently inflated prices to reap the fraudulent obtained profits.

"If adopted, this proposed rule would strengthen the transparency and quality of executive compensation disclosure," said SEC Chair Gary Gensler. "The Commission has long recognized the value of information on executive compensation to investors. In 2015, the Commission proposed rules to implement the Dodd-Frank Act's 'pay versus performance' requirement. In this reopening release, we are considering whether additional performance metrics would better reflect Congress's intention in the Dodd-Frank Act and would provide shareholders with information they need to evaluate a company's executive compensation policies."

This reopening in part is due to certain developments since 2015 when the proposing release was issued, including developments in executive compensation practices. The reopened comment period permits interested parties to submit further comments and data on the rule amendments the Commission first proposed in 2015 and welcomes comments in response to certain changes from the 2015 proposal that the Commission is considering, as well as additional questions being raised by the Commission in its reopening release.

The public comment period will remain open for 30 days following publication of the release in the Federal Register.

Financial incentives drive how executives perform in their role as fiduciaries to companies and their shareholders. Understanding what those incentives are and whether they are actually working - that is, if and how they link to company performance - is critical for investors in evaluating a company's compensation practices.

The Dodd-Frank mandate for a rule requiring companies to disclose the relationship between executive compensation actually paid and the financial performance of the company is among the most useful, straightforward, and commonsense provisions in that law. Yet, it has been over eleven years since Dodd Frank imposed that mandate, and over six years since the SEC proposed such a rule. In that time, executive compensation-and the gap between pay for executives and everyday workers-has grown tremendously.[1] Investors need to understand if that growth is concomitant with the value created. In other words, are shareholders getting their money's worth? That question, central to good corporate governance, is what this proposed disclosure seeks to address.

I'm pleased that the Commission is preparing to finalize this rule. Today's reopening of the comment file allows commenters a new opportunity to offer their views and the Commission the opportunity to ensure it is relying on current data. The reopening release highlights certain changes the Commission is considering to its proposed approach to help ensure the disclosure captures how companies actually link financial performance to executive compensation, while still preserving important comparability in disclosure from company to company. Specifically, the reopening release contemplates providing companies additional flexibility through disclosure of, in addition to the proposed performance metric of total shareholder return, other metrics of their choosing.[2]

The modern compensation landscape now encompasses enhanced reliance on performance metrics related to, for example, climate, diversity, and other company-specific ESG goals.[3] It would be helpful to hear from commenters on how the increased flexibility contemplated in today's reopening release may facilitate investor analysis of the use of such metrics and targets in compensation plans, and how it may enable companies and investors to better evaluate the success of the many tailored and unique compensation plans companies employ.

In addition, the reopening release highlights certain changes in the regulatory landscape since the initial proposal. One such change relates to smaller reporting companies, which the Commission originally proposed to include in the rule's requirements, but only on a scaled basis. Today's reopening release explains that the Commission expanded the definition of smaller reporting company in 2018 and estimates that smaller reporting companies today would account for 45 percent of all companies that would be subject to the rule's requirements.[4] That means nearly half of all reporting companies would be exempt from certain of the proposed disclosure requirements. It would be helpful to hear from commenters as to whether we should include exemptions for smaller reporting companies in the final rule and, if so, how best to calibrate them.

I look forward to reviewing comments on these and other aspects of the proposal as well as the new questions raised in today's release. I thank the staff for their thoughtful work.

[1] See Lawrence Mishel & Jori Kandra, Economic Policy Institute, CEO pay has skyrocketed 1,322% since 1978 (Aug. 10, 2021) (showing average annual CEO compensation increasing from 2009 to 2020 by 130.3 percent, and the CEO-to-worker pay ratio increasing during the same time period by 97.7 percent); see also Theo Francis & Kristin Broughton, CEO Pay Surged in a Year of Upheaval and Leadership Challenges, Wall Street Journal (Apr. 11, 2021) ("Median pay for the chief executives of more than 300 of the biggest U.S. public companies reached $13.7 million last year, up from $12.8 million for the same companies a year earlier and on track for a record, according to a Wall Street Journal analysis. Pay kept climbing in 2020 as some companies moved performance targets or modified pay structures in response to the Covid-19 pandemic and accompanying economic pain. Salary cuts CEOs took at the depths of the crisis had little effect. The stock market's rebound boosted what top executives took home because much of their compensation comes in the form of equity.").

[2] The Commission originally proposed to use total shareholder return (TSR) as the measure of performance against which to assess compensation. The reopening release provides that the Commission is considering whether to require, in addition to TSR, the disclosure of additional measures of performance: pre-tax net income, net income, and a measure chosen by the company (the Company-Selected Measure). We are also considering requiring a company to list its five most important measures used to link compensation actually paid to company performance. See Reopening of Comment Period for Pay Versus Performance, Release No. 34-94074 (Jan. 27, 2022) [hereinafter Reopening Release].

[3] See Hazel Bradford, Executive pay increasingly tied to environmental, social performance metrics, Pensions & Investments (Nov. 12, 2021) ("Five years ago, of the 65 S&P 500 companies including E&S [environmental and social] metrics, less than 20% had more than one. By 2020, 100 S&P 500 companies included roughly 150 metrics."); Emily Glazer and Theo Francis, CEO Pay Increasingly Tied to Diversity Goals, Wall Street Journal (June 2, 2021) ("By this spring, a third of S&P 500 companies had disclosed using a diversity measure in their compensation structures, or mentioned diversity in explaining executive pay."). We know that compensation can work to help achieve any number of metrics and targets a company might set. Consider for instance academic research from 2019 demonstrating that airlines offering their executives bonuses for on-time flight arrivals did in fact achieve more on-time flight arrivals. See Rajesh K. Aggarwal and Carola Schenone, Incentives and Competition in the Airline Industry, 8 Rev. of Corp. Fin. Studies 380 (2019). Even where, as in the airline example, the specific metrics may not be traditional financial metrics, they are still ultimately aimed at enhanced financial performance. With respect to ESG metrics and targets, there is increasing recognition of their relationship to long-term value. See, e.g., BlackRock Investment Stewardship, Global Priorities (Jan. 2022) ("Disclosure of material issues that affect the company's long-term strategy and value creation, including material ESG factors, is essential for shareholders to be able to appropriately understand and assess how risks are effectively identified, managed and mitigated."); Bank of America,2020 Annual Report("As our Global Research team has found, companies that pay close attention to environmental, social and governance (ESG) priorities are much less likely to fail than companies that do not, giving investors a significant opportunity to build investment portfolios for the long-term. And - through research and our own lived experience - we know that ESG commitments can translate into a better brand, more client favorability and a better place for our teammates to work.").

[4] See Reopening Release at n.5 ("Based on staff analysis of filings in 2019, approximately 45 percent of registrants subject to the Proposed Rules would be SRCs [smaller reporting companies] and thus would be exempt from the asterisked disclosure, compared to approximately 40 percent at the time of publication of the Proposed Rules."). The proposal excluded foreign private issuers, registered investment companies, and emerging growth companies. It included smaller reporting companies, but only on a scaled basis, requiring them to disclose the relationship between compensation actually paid and TSR as a measure of performance, but limiting the time period of their disclosure and exempting them from disclosure of peer group total shareholder return, which non-smaller reporting companies would be required to disclose. The reopening release provides that the Commission is considering exempting smaller reporting companies from certain of the newly contemplated disclosure requirements, the Company-Selected Measure and top five performance measures.

In 2010, with the passage of the Dodd-Frank Act, Congress recognized the importance of increasing transparency and accountability in executive pay practices.[1] As part of that executive compensation disclosure mandate, the Commission proposed a rulemaking in 2015 that would provide insight into the links between executive pay and company performance. Unfortunately, the Commission let that rule, like other Dodd-Frank rules, languish.

Today, I am glad see that we are moving forward on this Congressional mandate once again. However, the world has changed significantly since 2015 and so have executive pay practices.[2] For example, companies are increasingly linking executive pay to environmental, social, and governance ("ESG") measures, which is one tangible way that companies may be able to advance their stated ESG goals and improve performance.[3] Given these kinds of changes, it is important that we re-open the comment file and solicit further input.

As the Commission considers the best ways to calibrate pay and performance disclosures, I encourage commenters to provide insight into how ESG measures are utilized in executive pay packages. It is critical that investors and commenters let the Commission know whether there is sufficient insight into the methodologies behind the measures on which ESG compensation targets are based.[4] Separately, similar questions arise about the use of targets based on measures of performance with qualitative or discretionary inputs-for example, targets that are not based on quantitative measures with defined methodologies or items disclosed in financial statements. The reopening release seeks to grapple with these practices by proposing to give registrants flexibility in deciding what measures should be disclosed.[5] I look forward to comments on these issues.

Lastly, I am interested in feedback on whether to scope in companies classified as smaller reporting companies ("SRCs").[6] Recent data show that approximately 45% of all reporting companies are classified as SRCs.[7] I certainly support promoting greater competition and capital formation in our markets, but, as commenters in 2015 noted, disclosure about executive compensation provides information that affects a company's bottom line[8] and can be an important input for investors as they allocate capital.[9]

Meaningful disclosure of executive compensation is key to aligning the incentives of a company's management, board of directors, and investors. So I look forward to the feedback and working to improve transparency in this critical area. As always, thank you to the staff at the SEC, whose excellent work and continued dedication to improving the markets for investors advanced this important rulemaking.

[1] See, e.g., Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203 §§ 952-956.

[2] See Reopening of Comment Period for Pay Versus Performance, Release No. 34-[] at n. 11 & accompanying text (Jan. 26, 2022) [hereinafter Release].

[3] See UN Principles for Responsible Investment, ESG-Linked Pay: Recommendations for Investors (June 17, 2021) ("In the last few months, a steady stream of companies have announced the introduction of ESG-linked executive pay to bolster sustainability credentials...The moves appear to be in line with a broader trend: a 2020 Willis Towers Watson survey found that four in five companies are contemplating similar measures over the next three years, elevating environmental and social factors in their incentive plans."); Meridian Compensation Partners, 2020 Executive Compensation Trends and Developments Survey (20% of 108 issuers surveyed included ESG performance metrics in 2020 incentive plans, with most adding ESG metrics to the short-term incentive plan).

[4] See Release Request for Comment #22 at 28. See also Caroline A. Crenshaw, Commissioner, Sec. & Exch. Comm'n, Virtual Remarks at the Center for American Progress and Sierra Club: Down the Rabbit Hole of Climate Pledges (Dec. 14, 2021) ("Accurate and reliable climate metrics are not only important for investors' evaluation of sustainability efforts or how companies are spending shareholder money on politics, it is also critical for assessing fundamental and traditional corporate governance matters, like executive compensation. Recent surveys indicate that more executive compensation is being linked to ‘sustainability performance.' Linking executive pay to achieving ESG or sustainability-related goals can be a positive alignment of incentives. However, without reliable and consistent disclosures about those ESG targets, I wonder whether investors and Boards have the tools to accurately assess if such targets have been met and if that alignment between executive pay and ESG targets has been achieved.").

[5] See Id. at 9-11.

[6] For a definition of smaller reporting company See 17 CFR 240.12b-2. The Commission updated this definition in 2018 to scope a larger number of reporting companies, intending to reduce compliance costs facilitate capital formation. See Amendments to the Smaller Reporting Company Definition, Release No. 33-10513 (June 28, 2018) [83 FR 31992 (July 10, 2018)]

[7] See Release at n. 5.

[8] See Council of Institutional Investors, Comment Letter on Pay Versus Performance Proposal (June 25, 2015) "(We believe pay decisions are one of the most direct ways for shareowners to assess the performance of the board. And, as indicated, they have a bottom line effect, not just in terms of dollar amounts, but also by formalizing performance goals for employees, signaling the market and affecting employee morale. As a result, the Council has and will continue to oppose exempting SRCs and EGCs from compensation related disclosures . . . that . . . are useful to investors.").

[9] See CalPERS, Comment Letter on Pay Versus Performance Proposal (July 6, 2015) ("The cost of compliance may initially appear to be a larger cost for a smaller company, but research in similar contexts has shown that the lack of transparency ultimately penalizes such exempted companies in the market.").

While I agree that we should move forward on this nearly twelve-year-old Dodd-Frank rulemaking mandate, I do not agree with the approach taken in this release. Instead of fixing critical shortcomings of the 2015 Proposing Release, the re-opening release doubles down on a flawed proposal and raises the prospect of additional disclosure requirements. These supplemental requirements would increase the burdens of public company reporting, but seem likely to be of dubious use to investors. The re-opening release recognizes at some level that more discretion and flexibility is needed than the 2015 Proposing Release afforded, but that recognition oddly manifests itself in a flurry of new prescriptions. The additional requirements raised in this release go well beyond the statutory mandate of Section 953(a), are not responsive to the comment file, and do not seem warranted in light of current executive compensation practices related to company performance. I would have preferred a re-opening release that solicited further comment on whether we should permit companies greater flexibility to determine which financial performance measure is appropriate in this context and to determine how to calculate executive compensation actually paid. I respectfully dissent, but look forward to hearing commenters' reactions.

[B]eginning approximately August 2015 and continuing through March 2017, Thomas and Bartoletta operated a commodity pool through a now-defunct Florida-registered corporation called the Capital Trading Advisory Group LLC (CTAG), formerly of Seminole, Florida, and accepted funds from at least 35 individual participants. According to the order, Thomas was the sole owner of CTAG and acted as an unregistered AP by soliciting and collecting funds from pool participants for the CTAG pool. Thomas also served CTAG in a principal capacity, operated the CTAG pool under an invalid claim of exemption from certain CPO requirements, and failed to provide required pool disclosure statements and reports. 

The order further finds that Bartoletta furnished commodity trading advice to pool participants and directed trading in the custodial account holding CTAG participant funds while not registered as a CTA as required. Bartoletta also acted as an unregistered AP of CTAG by soliciting and collecting funds from prospective pool participants for the CTAG pool.

• Securities Industry Commentator
• Bill Singer