CFTC Catching the Minnow, Ignoring the Juicy Walleye

It’s full steam ahead for the CFTC, sending a CTA to prison for lying to customers. Yes you heard it right; the CFTC is holding someone accountable for wrongdoing in the industry. Upon reading the press release, we were shocked to gain knowledge that Josh Wallace of System Capital had misrepresented to clients the company’s wealth of prior experience in trading futures, accumulating $29 Million assets under management.

After an audit by the CFTC, they discovered there wasn’t much experience for Mr. Wallace to go by. CFTC went after Wallace to the full letter of the law, resulting with the quest to revoke registrations for Mr. Wallace and a 27 month prison sentence for committing criminal commodity fraud.

This is exactly what the CFTC should have their focus on.  In the last two months, the CFTC has filed charges against U.S. bank over the PFG Fraud, filing civil charges against Corzine in the MF Global scandal, and now throwing a CTA in prison for fraud.

While it only took them almost two years to get their act together on the two biggest scandals in the managed futures history, we are left scratching our heads as to how and why they were able to successfully convict a CTA for inventing a history of prior experience, and yet unable to find and build a criminal case again Corzine. If you were to ask anyone in the industry, it would not be difficult to discover evidence of how Corzine violated a portion of the Commodity Exchange Act. Yet it took federal investigators two years to announcement there will be no criminal charges against him?

Congrats, CFTC! We’re glad you caught this guy, and you pursued him. These instances are true attempts at restoring confidence in the system, because what’s the point of rules and regulations, if nobody is held accountable?  Now if only you could one up yourself, and reconsider criminal charges against Corzine…. We can only hope.

Write a Comment

The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.