Court imposes $2.5M penalty on Worth Group and its principals for illegal off-exchange precious metals scheme

US regulators have once again acted against violations of the Dodd-Frank Act, and the provision against financed precious metals transactions carried on off-exchange, in particular.

The U.S. Commodity Futures Trading Commission (CFTC) has just announced that the U.S. District Court for the Southern District of Florida entered a Consent Order of Permanent Injunction against Florida-based Worth Group Inc. and its owner and operator, Andrew Wilshire, and his sister, Eugenia Mildner, who served as Worth’s sole officer and director prior to February 2012.

The Court’s Order requires the three Defendants to pay restitution of $1,250,000. Defendants Worth and Wilshire are also ordered to pay a civil monetary penalty $1,250,000. This makes a total of $2.5 million.

The Court’s Order results from the CFTC Complaint filed on August 13, 2013, that charged the defendants with defrauding retail precious metals customers and engaging in illegal, off-exchange retail commodity transactions.

According to the CFTC Complaint, Worth sold physical precious metals – specifically gold, silver, platinum and palladium – to individual retail customers throughout the United States on a financed basis. The defendants falsely claimed that Worth would purchase and store precious metals, when in fact Worth merely covered its obligations through unallocated spot forward contracts with third parties.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), financed precious metals transactions must be conducted on an exchange, unless the entity offering the transactions can establish that actual delivery of physical metal results within 28 days.

In addition, the Order also prohibits the defendants from future violations of the Commodity Exchange Act (CEA), as charged, and imposes permanent trading, solicitation, and registration bans against all of the defendants.

The official announcement from the CFTC on this case can be viewed by clicking here.

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