Friday, 25 July 2014
Last updated 1 hour ago
Nov 7 2007 | 12:30pm ET
Commodity trading adviser Cromwell Financial Services and its founder have been fined more than $20 million by a Florida Federal Court for fraudulently soliciting customers to purchase options on commodity futures contracts.
The firm, along with its founder, Deerfield Beach, Fla.-resident Philip Tuccelli, agreed to settle the charges, which also include claims that Cromwell’s branch managers, Richard Astern, Dennis Gee and Richard Peluchette and Compliance Director Michael Staryk, failed to diligently supervise Cromwell’s employees.
The Consent Order of Permanent Injunction and Other Equitable Relief was entered on Oct. 27 and stems from a complaint filed by the CFTC and New Hampshire on June 12, 2005. New Hampshire joined in the complaint to protect the interests of New Hampshire residents solicited by Cromwell.
The order finds that, from January 2002 through December 2003, Cromwell employees fraudulently solicited at least 900 members of the public to trade options on commodity futures contracts in accounts held at two futures commission merchants. Specifically, the order finds that Cromwell’s employees made false and materially misleading statements and omissions to actual and prospective customers by exaggerating the magnitude and likelihood of potential profits. They also represented that their trade recommendations could result in large profits within short periods of time, downplayed the risks of loss from trading options on commodity futures contracts, and failed to advise customers that over 85% of Cromwell’s customers lost money trading.
The order holds the defendants liable to pay Cromwell’s customers restitution in the following amounts: Cromwell and Tuccelli, jointly and severally, $9.2 million with Tuccelli’s obligation capped at $2 million; Gee, $523,000; Astern, $285,000; Staryk, $130,000; and Peluchette, $241,000.
The order also imposes civil monetary penalties against the defendants in the following amounts: Cromwell, $9.2 million; Tuccelli, $250,000; Gee, $120,000; Astern, $120,000; Staryk, $50,000; and Peluchette, $120,000.
Finally, the order permanently prohibits the defendants from engaging, directly or indirectly, in any business activities related to commodity interest trading.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…