A U.S. District Court judge for the Southern District of Florida entered a Consent Order ("Order") against a Florida-based telemarketing firm and its owners for (i) alleged "illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined, or financed basis," and (ii) acting as unregistered futures commission merchants ("FCMs"). The Order resulted from a January 2016 Complaint filed by the CFTC.
According to the Order, the firm solicited retail customers for the purchase of precious metals on a financed basis, and utilized third-party companies to provide financing for customer loans. The purchased metals were never delivered to the retail customers, nor were the transactions ever traded on a futures exchange, as required by Section 4(a) of the Commodity Exchange Act ("CEA"). Under the CEA, such transactions must be either traded on an exchange or delivered within 28 days (see CEA Sections 4(a) and 2(c)(2)(D)(ii)(III)).
The judge also found that the defendants violated CEA Section 4d(a) by accepting orders for retail commodity transactions despite not being registered as FCMs with the CFTC.
The Order requires the defendants to pay over $1.6 million in restitution and penalties.
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