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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Commodity Futures Trading Commission (CFTC) has today announced the filing of a civil injunctive enforcement action in the U.S. District Court for the District of Nevada against Defendants My Global Leverage, LLC (MGL) and its owner and managing member Toney Blondo Eggleston, who resides in Newport Coast, California.
The CFTC Complaint charges the Defendants with engaging in illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined, or financed basis. The Complaint further alleges that Eggleston, as controlling person for MGL, is liable for MGL’s violations of the Commodity Exchange Act (CEA).
According to the Complaint, since at least July 16, 2011 and continuing through at least November 2012, MGL, by and through its employees including Eggleston, solicited retail customers by telephone to engage in leveraged, margined, or financed precious metals transactions.
During that period, approximately 12 of MGL’s customers paid approximately $786,000 to MGL in connection with precious metals transactions, and MGL received commissions and fees totaling approximately $257,680 in connection with these precious metals transactions, according to the Complaint.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, leveraged, margined, or financed transactions such as those conducted by MGL, are illegal off-exchange transactions unless they result in actual delivery of metal within 28 days.
The Complaint alleges that metals were never actually delivered in connection with the leveraged, margined, or financed precious metals transactions made on behalf of MGL’s customers.
The Complaint further alleges that MGL executed the illegal precious metals transactions through Hunter Wise, LLC (Hunter Wise). The CFTC filed an enforcement action against Hunter Wise, among others, in December 2012, charging the defendants with engaging in illegal, off-exchange precious metals transactions, and charging Hunter Wise with fraud and other violations.
On February 19, 2014, the court found that Hunter Wise had no actual metal to deliver to customers and held that Hunter Wise engaged in illegal precious metals transactions and was required to register as a Futures Commission Merchant but did not do so and therefore violated Sections 4(a) and 4d of the CEA as per CFTC v. Hunter Wise Commodities, LLC, et al., 12-81311 (Order on the Parties’ Motions for Summary Judgment).
On April 15, 2014, the U.S. Court of Appeals for the Eleventh Circuit affirmed the court’s issuance of a preliminary injunction and held that the CFTC’s jurisdiction under Section 2(c)(2)(D) of the CEA extends to the precious metals transactions at issue in the case and that no exception to the CFTC’s jurisdiction applied.
Additionally, on May 16, 2014, after a bench trial on the remaining claims, including fraud, the District Court entered an Order finding that Hunter Wise fraudulently misrepresented the nature of precious metals transactions that resulted in millions of dollars in customer losses.
In its continuing litigation against MGL and Eggleston, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction from future violations of the CEA, as charged.
For the official announcement from the CFTC, click here.