CFTC orders Sean R. Stropp to pay $250,000 penalty and serves cease and desist order following false and misleading statements during a CFTC investigation
The US Commodity Futures Trading Commission (CFTC) has adopted a similar method of penalizing those who provide incorrect statements to compliance officers during inspections as that which has been long employed by the National Futures Association (NFA), demonstrated yesterday by its enforcement of a permanent exclusion from the industry, and a substantial monetary penalty.
The rulings regarding the provision of false statements to the CFTC was invoked during the implementation Commodity Exchange Act, which forms part of the Dodd-Frank Act which was sworn in to the US legal system 2010, with final rulings on OTC derivatives having been concluded last year.
In this particular case, the CFTC levels charges against Floridian commodity trading company CEO Sean R. Stropp for making false and misleading statements of material fact, and omitting material facts, to CFTC staff during a CFTC Division of Enforcement (DOE) investigation.
Engaging in such a practice will impact Mr. Stropp’s bank balance as well as his future career, as the order requests that Mr. Stropp must pay a civil monetary penalty of $250,000, as well as stipulating that Mr. Stropp must cease and desist from violating the relevant provision of the CEA and permanently prohibits him from, directly or indirectly, engaging in trading on or subject to the rules of any registered entity.
Whilst Mr. Stropp’s firm majored on leveraged metals contracts, it is important to note that his prohibition constitutes a full exclusion from engaging in the provision of any asset class to investors.
According to the Order, Mr. Stropp provided DOE staff with a signed and notarized financial disclosure statement in connection with the CFTC’s investigation into potentially unlawful sales of off-exchange leveraged metals contracts by Mr. Stropp and his company Barclay Metals, Inc. (Barclay). In his statement, Mr. Stropp falsely represented that the statement included all his known assets and that the statement was true, correct, and complete.
Furthermore, the CFTC’s order finds that Mr. Stropp omitted material facts from the statement, including both his control of, and his spouse’s ownership interest in, another entity selling leveraged metals contracts and his ownership and control of two of that other entity’s bank accounts.
CFTC DOE Acting Director Gretchen Lowe commented, “Lying or failing to disclose material information during a CFTC investigation is unacceptable, and those who do so must bear the consequences.”