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RT'ers,
Here's an interesting item I ran accross while searching for more
information on pattern trading systems.
Release: #4039-97 (CFTC Docket #97-12)
For Release: July 31, 1997
CFTC FILES ADMINISTRATIVE COMPLAINT CHARGING CURTIS McNAIR
ARNOLD AND LONDON FINANCIAL, INC. WITH FRAUD AND FAILURE TO
REGISTER IN CONNECTION WITH MARKETING, SALE AND TRADING OF
PATTERN PROBABILITY STRATEGY TRADING SYSTEM
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced
the filing on
July 30, 1997, of a five-count administrative complaint against Curtis
McNair Arnold of Jupiter,
Florida, and London Financial, Inc. (LFI), a Florida corporation with
its principle place of
business in Tequesta, Florida. Arnold is president and sole principal of
LFI, and neither is registered
with the CFTC in any capacity.
The CFTC complaint charges Arnold and LFI with violating the anti-fraud
provisions of the
Commodity Exchange Act and CFTC regulations since 1994 by fraudulently
soliciting customers
to purchase a commodity futures trading system known as Pattern
Probability Strategy (PPS).
The complaint also alleges that the respondents since at least 1996 have
expanded their fraudulent
marketing to include other trading systems, some authored by Arnold and
some by other system
vendors.
Specifically, the complaint alleges that Arnold and LFI, among other
things:
misrepresented Arnold's personal trading results and the historic
profitability of PPS; and
failed to disclose that certain trading results were based on
hypothetical trades, rather than on actual
trading results.
Arnold and LFI are also charged with acting as unregistered commodity
trading advisors, since at
least 1992. Arnold is further charged in the complaint with acting as an
unregistered commodity
pool operator and as an unregistered associated person of a commodity
pool operator.
A public hearing is to be held to determine whether the allegations in
the complaint are true and to
determine what sanctions should be imposed. Possible CFTC sanctions
include:
-- a cease and desist order prohibiting the respondents from violating
provisions of the CEA and
CFTC regulations;
-- registration restrictions;
-- trading prohibitions; and
-- civil penalties of not more than the higher of $100,000 ($110,000 for
violations committed after
November 27, 1996) or triple the monetary gain to each respondent for
each violation of the CEA
and CFTC regulations, among other remedial sanctions.
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