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The U.S. Commodity Futures Trading Commission (CFTC) has once again shown its rigidity when it comes to following the the provision of the Dodd-Frank act that addresses retail commodity trading.
The regulator announced on Wednesday that it filed a civil injunctive enforcement action in the U.S. District Court for the Southern District of Florida against Oakmont Financial, Inc. and Joseph Charles DiCrisci, the company’s owner and principal.
The CFTC charges the Oakmont and Mr DiCrisci with engaging in illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined, or financed basis.
In addition, the complaint alleges that Mr DiCrisci managed, or controlled those who controlled, the day-to-day operations of Oakmont, and therefore, as controlling person for Oakmont, should be held responsible for Oakmont’s violations of the Commodity Exchange Act (CEA).
According to the Complaint, from at least July 16, 2011, and continuing through at least July 27, 2012, Oakmont, by and through its employees, solicited retail customers by telephone to engage in leveraged, margined, or financed precious metals transactions. During that period, Oakmont collected at least $2,308,228 from at least 107 customers in connection with precious metals transactions and received commissions and fees totaling at least $735,329.
The Complaint also alleges that Oakmont accepted customer orders and funds and, hence, acted as a Futures Commission Merchant (FCM), which, however, had no registration as such with the CFTC.
In its announcement regarding the case, the CFTC reminds that under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, leveraged, margined, or financed transactions, such as those conducted by Oakmont, are illegal off-exchange transactions unless they result in actual delivery of metals within 28 days.
The Complaint alleges that metals were not actually delivered in connection with transactions made on behalf of Oakmont’s customers.
In its litigation against Oakmont and Mr DiCrisci, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution to affected customers, permanent registration and trading bans, and a permanent injunction from future violations of the CEA.
You can view the full announcement from the CFTC by clicking here.