New York Federal Court orders fraudster to pay more than $1 million for bogus algorithmic trading fund

The U.S. Commodity Futures Trading Commission (CFTC) announced today that Judge Colleen McMahon of the U.S. District Court for the Southern District of New York entered a Consent Order of permanent injunction against Defendants Wayne P. Weddington III of New York, New York and his companies — Brunswick Capital LLC of New Canaan, Connecticut, and Brunswick Capital Partners LP, a Delaware corporation licensed to do business in New York.

The Order, entered on August 4, 2015, requires the Defendants jointly to pay a $650,000 civil monetary penalty and restitution of $375,039 to defrauded customers. The Order also imposes a permanent trading and registration ban on the Defendants and prohibits them from further violations of the anti-fraud provisions of the Commodity Exchange Act, as charged.

The Scam

The Order stems from a CFTC Complaint filed April 18, 2014 and an Amended Complaint filed in December 2014, which together charged the Defendants with solicitation fraud, misappropriating customer funds, making false statements, and acting in unregistered capacities in connection with operating a commodity pool and a proprietary quantitative algorithm developed by the Defendants to trade E-mini S&P 500 futures contracts and other index futures.

According to the Order:

1) Defendants solicited and accepted approximately $1.35 million from pool participants, and filed a false commodity trading advisor exemption to trade the fund.

2) Issued false statements and misappropriated a portion of the pool participants’ funds.

3) Created false financial and trading records that purported to show that the quantitative algorithmic trading system generated monthly trading profits, when in fact, the system lost money virtually every month.

4) Hired marketers to solicit funds from hedge funds and other institutional investors using the false trading results.

For more information from the CFTC click here.

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