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Foreign Exchange

Fraudsters fined in Florida

The US Commodity Futures Trading Commission has secured more than $12 million in restitution and civil monetary penalties against nine Florida defendants in settlement of an anti-fraud lawsuit related to the marketing of illegal off-exchange FX options.

On December 4, US judge Edwin Torres of the Southern District of Florida entered four separate consent orders of permanent injunction against The Liberty Mutual Group, Addison Financial Group, Addison Management Group, Hamlin Mercer Group, Colfax Management Group, Alan Lerner, Forefront Investment Limited Partnership, Todd Guthrie, and Benji Dayan. These had all been charged with fraud in a CFTC complaint filed on May 16 2007.

The court has ordered the defendants to pay just over $7 million in restitution to defrauded investors. In addition, the court imposed civil monetary penalties and permanently barred Forefront Investments Limited and the two Addison firms from engaging in any commodity-related activity. It also barred Dayan, Guthrie, and Lerner from engaging in any commodity trading on behalf of others on any exchange or soliciting or accepting any funds from others for any on-exchange commodity trading.

It was found that from at least February 2005 until June 2006, the Addison companies fraudulently solicited retail customers to trade FX options with Forefront Investments Limited as the counterparty. Customers lost more than $7 million of about $7.6 million they had invested. The Addison companies generated commissions of about $3.3 million.

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