The U.S. Commodity Futures Trading Commission (CFTC) has announced that Judge Timothy M. Cain of the U.S. District Court for the District of South Carolina entered a Consent Order against Defendant Jody Dupont of Anderson, South Carolina, and an Order of Default Judgment against his company, Open Range Trading LLC, also of Anderson.
Neither DuPont nor Open Range has ever been registered with the CFTC.
According to the Orders, from at least March 2012 until September 29, 2016, Dupont and Open Range fraudulently solicited at least 175 clients and prospective clients to subscribe to a commodity futures day-trading system that generated buy and sell trading signals in various futures markets, including the E-mini S & P 500 Index, the Russell 2000 Index Mini, crude oil, and soybeans.
Specifically, the Orders find that Dupont and Open Range misrepresented Dupont’s futures trading experience as well as the trading system’s profit and loss performance. According to the Orders, Dupont and Open Range also falsely claimed that Dupont and Open Range were engaging in actual trading when in fact they were not, and falsely and misleadingly presented the trading system’s results as real rather than simulated or hypothetical.
For example, the Orders find that, for the time period January 2013 to January 2016, Dupont and Open Range had falsely claimed that the Open Range trading system had generated profits of between $700 to over $13,000 per month, with 30 of the 37 months shown as profitable. According to the Orders, in fact, Open Range never had a futures account to make these purported profits and Dupont had only two futures accounts, both of which he traded at a loss.
Dupont and Open Range charged clients and prospective clients between $250 and $25,000 per month for the trading system and ancillary trading services, and clients paid Dupont and Open Range approximately $92,000, according to the Orders.
The Consent Order requires Dupont to disgorge $92,000 in illegal profits and pay a civil monetary penalty of $100,000. The Consent Order also enjoins Dupont from future violations of the Commodity Exchange Act (CEA) and the CFTC’s Regulations, as charged, and permanently prohibits Dupont from seeking registration with the CFTC and from trading for five years.
Open Range is jointly and severally liable for Dupont’s disgorgement and civil monetary penalty, according to the Default Order. In addition, the Default Order enjoins Open Range from future violations of the CEA and CFTC Regulations, as charged, and imposes permanent registration and trading bans on Open Range.
The Court’s Orders arise from a CFTC enforcement action filed on September 29, 2016, charging Dupont and Open Range with fraud and false advertising.