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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Commodity Futures Trading Commission (CFTC) entered an Order filing and settling charges against Dallas, Texas-based Commodity Pool Operators (CPOs) John B. Oden and Oden Capital Management, LLC (OCM) for unlawfully operating two commodity interest pools, Oden Currency Fund, LP (OCF), operated by Oden, and Oden Currency Fund I, LP (OCF I), operated by OCM.
The CFTC Order requires Oden and OCM jointly and severally to pay a $100,000 civil monetary penalty and imposes a five-year ban on their solicitation of funds for, or trading in commodity interests on behalf of others, or applying for registration, claiming exemption from registration, or engaging in any activity requiring registration with the CFTC. The Order also requires Oden to cease and desist from violating the Commodity Exchange Act and CFTC Regulations, as charged.
The Order finds that, during April to June 2014, Oden acted as a CPO without properly registering with the CFTC, as required, and that Oden and OCM failed to properly operate their respective pools in accordance regulatory requirements. Oden was the chief compliance officer, sole owner, and a registered Associated Person and a listed principal of OCM.
Furthermore, according to the Order, between April and November 2014, while acting as a CPO for OCF, Oden improperly claimed an exemption from registration and violated numerous regulatory requirements for operating commodity interest pools. Specifically, the Order finds that Oden
- failed to provide required disclosures about his claimed registration exemption status,
- failed to promptly furnish to each OCF pool participant a copy of certain required monthly statements,
- improperly comingled OCF pool participant funds with his personal accounts, as well as accounts belonging to family members, and
- improperly utilized promotional materials that showed trading returns based on hypothetical results without also including required disclosure language.
Additionally, the Order finds that, between November 2014 and December 2015, OCM, a registered CPO, also failed to follow regulatory requirements for operating as a CPO. Specifically, OCM
- failed to send certain quarterly reports to OCF I pool participants,
- failed to include the required oath or affirmation of accuracy and completeness in the quarterly reports it did send to OCF I pool participants, and
- improperly utilized promotional materials that showed trading returns based on hypothetical results, without also including required disclosure language.
Oden is also held liable for OCM’s violations of CFTC Regulations as a controlling person who failed to act in good faith or knowingly induced the violations of OCM.