The National Futures Association (NFA) has permanently barred from NFA membership Chazon QTA Quantitative Trading Artists LLC, an NFA Member commodity pool operator (CPO).
In addition to this, the NFA also permanently barred from NFA membership Lawrence I. Fejokwu, the firms’ sole associated person (AP) and a firm principal. Chazon and Fejokwu also are barred from acting as principals of an NFA Member.
New Jersey, London or Nigeria? That is the question
According to the NFA’s Online Registration System, Chazon’s main office is located at 244 Fifth Avenue in New York, New York. However, when NFA attempted to visit Chazon at that address, staff found that the address was a P.O. Box rather than an office. NFA then visited what it believed was Fejokwu’s residence in Guttenberg, New Jersey but Mr. Fejokwu was not there.
As a result, the NFA sent Mr. Fejokwu an e-mail and left him a phone message asking that he contact the NFA. Mr. Fejokwu got back to NFA and indicated that he was in London but agreed to a telephone conference with NFA on March 25, 2014.
During the March 25 telephone conference, Mr. Fejokwu discussed the two pools that Chazon operates, which are Maria Desatadora Master Fund and Maria Desatadora Umbrella Fund. According to Mr. Fejokwu, the Maria Desatadora Umbrella Fund was a feeder fund that invested solely in the Maria Desatadora Master Fund and was the sole investor/participant of the Master Fund.
Mr. Fejokwu said that the feeder fund, Maria Desatadora Umbrella Fund, had only two participants – Vision Africa and Vision Nigeria, which, as indicated above, are also principals of Chazon. Fejokwu represented that both Vision Africa and Vision Nigeria are non-profit foundations funded 100% by him and that neither foundation has ever had any other contributors or participants besides him, Mr. Fejokwu indicated that the purpose of the foundations is to provide charitable contributions to Nigeria, which is Mr. Fejokwu’s birthplace.
Substantial trading losses
The NFA obtained certain records from Fejokwu pertaining to Chazon and the Maria Desatadora Master Fund and Maria Desatadora Umbrella Fund, including bank and brokerage statements. ln reviewing these documents, NFA found that in April 2011 Fejokwu’s foundations, Vision Africa and Vision Nigeria, had each initially invested approximately $800,000 into the Maria Desatadora Master Fund, for a combined investment of almost $1.6 million. Additionally, in reviewing the performance for the Maria Desatadora Master Fund, NFA noted that the Master Fund’s NAV had dropped significantly, from about $’1.6 million in 2011 to about $125,000 in March 2014, mainly due to trading losses.
The NFA also requested and obtained bank statements for Vision Africa’s and Vision Nigeria’s bank accounts which showed deposits to these accounts from Chazoneering LLC (Chazoneering) – a former CPO/CTA NFA Member that Fejokwu owned and operated between 2003 and 2005. Based on this information, NFA requested that Fejokwu provide the 2011 bank records of Chazoneering so NFA could attempt to determine the source of the funds that Chazoneering had deposited into Vision Africa’s and Vision Nigeria’s bank accounts.
Fejokwu did not produce Chazoneering’s bank records and instead sent NFA a rambling e-mail message claiming that he alone had funded Vision Africa and Vision Nigeria, through an endowment from Chazoneering, and that he had already provided proof to NFA to show that Vision Africa and Vision Nigeria were 100% endowed by him.
Contrary to Mr. Fejokwu’s claims, he had not provided NFA with adequate documentation demonstrating the source of the funds Chazoneering had deposited in Vision Africa’s and Vision Nigeria’s bank accounts. Therefore, the NFA sent another request to Fejokwu for the bank records of Chazoneering.
The NFA also asked Mr. Fejokwu to meet with NFA in person, as NFA had learned that Fejokwu was returning to the United States from London in April. A meeting was arranged with Fejokwu on April 7 at his residence in New Jersey.
Who are the owners?
At the meeting, Fejokwu gave NFA what he purported to be Chazon’s LLC agreement. !n reviewing this LLC agreement, NFA noted that it identified Mr. Fejokwu and Vision Africa as 50% owners of Chazon. However, unbeknownst to Fejokwu, NFA had previously obtained an LLC agreement for Chazon from a futures commission merchant (FCM) NFA Member who had received it from Mr. Fejokwu and Chazon. According to the LLC agreement obtained from the FCM, Chazon is 100% owned by an entity called Chazon New Africa Group, SA, which is purportedly 100% owned by Fejokwu.
As a result of this, both Chazon and Mr. Fejowku have seen an end to their NFA membership.
The Decision, issued by an NFA Hearing Panel, is based on a Complaint authorized by NFA’s Business Conduct Committee on May 15, 2014. The Hearing Panel found that Chazon and Mr. Fejokwu willfully violated NFA Rules by refusing to produce bank records requested by NFA.
The complete text of the NFA’s decision can be viewed by clicking here.