CFTC orders Michigan Introducing Broker fraudster to pay over $7 million

The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Respondents Atlantas Group, Inc. (Atlantas) and Edmund Hysni for committing solicitation fraud in connection with options on futures contracts trading on the Chicago Board of Trade and the Commodity Exchange, Inc., and against Hysni for willfully making material false statements to the National Futures Association (NFA) in connection with its investigation of the fraud.

Hysni, who resides in Waterford, Michigan, was the sole owner and president of Atlantas, which had its principal place of business in Waterford. Neither is currently registered with the CFTC.

The CFTC Order requires Atlantas and Hysni, jointly and severally, to pay restitution of $5 million and a $2.2 million civil monetary penalty; permanently prohibits them from trading on any registered entity, as defined in the Commodity Exchange Act (CEA), or registering with the CFTC; and bars them permanently from engaging in any commodity-related activities. The Order also requires them to cease and desist from violating the provisions of the CEA and CFTC Regulations, as charged.

Clients Lost Most of Their Money in the Fraudulent Scheme

The Order finds that, between 2006 and 2012, Atlantas, a registered Introducing Broker between March 2006 and June 2013, and Hysni, a registered Associated Person between February 2006 and June 2013, falsely represented to their customers that:

1) they would return approximately 300% of their customers’ initial investments
2) their investment strategy was safe and conservative, and
3) they had a track record of success.

The Order finds that, instead, Atlantas and Hysni invested their clients’ money in out-of-the-money option spreads resulting in their customers losing most of their money. Furthermore, Atlantas collected approximately 90% of its clients’ losses in commissions while misrepresenting the effect of such commissions, the Order finds. Specifically, Atlantas and Hysni failed to disclose to their customers the effect on customers’ profits or losses of Respondents’ trading strategy and the commissions that Atlantas was charging customers, according to the Order.

False Statements to the NFA

In addition, the Order finds that Hysni, who controlled and acted for Atlantas, willfully made material false statements to the NFA in connection with NFA’s investigation of Atlantas’ and Hysni’s fraud. In the course of its investigation, NFA questioned Hysni about money that Atlantas paid to an unregistered Associated Person, and Hysni provided false information regarding those payments, the Order finds.

The Order further finds that Hysni is liable for Atlantas’ violations as its President, owner, and controlling person and that Atlantas is liable for Hysni’s violations because Hysni was acting for Atlantas within the scope of his employment or office with Atlantas when he committed his violations.

For the full details from the CFTC click here.

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CFTC orders Michigan Introducing Broker fraudster to pay over $7 million


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