Photo: Chicago Board Of Trade. Credit: Wikipedia.
FROM: COMMODITY FUTURES TRADING COMMISSION
CFTC Charges CTI Group, LLC, Cooper Trading, Stephen Craig Symons, and James David Kline, all of California, with an $11 Million Fraud in the Sale of Automated Trading Systems
Federal court issues emergency order freezing defendants’ assets and protecting books and records.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a federal court action against defendants CTI Group, LLC, Cooper Trading, and Stephen Craig Symons of Corona del Mar, Calif., and James David Kline of Van Nuys, Calif., charging them with fraudulent sales practices in connection with the sale of two automated trading systems, known as the Boomer and Victory Trading Systems.
The CFTC complaint was filed under seal May 11, 2012, in the U.S. District Court for the Southern District of New York, and on May 14, 2012, Judge Andrew L. Carter, Jr. entered an emergency order freezing the defendants’ assets and prohibiting the destruction or alteration of books and records. The judge set a hearing date on the CFTC’s motion for a preliminary injunction for June 21, 2012.
According to the CFTC complaint, since at least August 2009 and continuing through the present, CTI Group, LLC and Cooper Trading (which allegedly operated as a common enterprise and are collectively referred to in the complaint as “CTI”), by and through Symons, Kline, and others, fraudulently solicited clients to subscribe to the Boomer and Victory Trading Systems, used by clients to trade E-mini Standard and Poor’s 500 Stock Index futures contracts in managed accounts. To carry out the fraud, CTI and Kline allegedly engaged, and continue to engage, in a systematic pattern of material false statements and omissions in connection with the marketing of CTI’s Trading Systems to clients and prospective clients. CTI sells subscriptions to its Trading Systems for $5,000 to $6,000 and has sold subscriptions to well over 1,000 clients, receiving at least $11 million from the sale of its Trading Systems, according to the complaint.
CTI’s misrepresentations and omissions in the sale of its Trading Systems allegedly concern 1) how long CTI has been in business; 2) CTI’s experience developing and marketing Trading Systems, 3) the identities and professional experience of CTI’s personnel (who use fictitious names when communicating with clients), 4) the track record of CTI’s Trading Systems, 5) the past profitability of CTI’s Trading Systems, and 6) the transaction costs associated with trading via CTI’s Trading Systems.
CTI’s salespeople, including Kline, also allegedly made false statements to clients and prospective clients about CTI’s purported money-back guarantee and misrepresented the risks associated with trading futures contracts using CTI’s systems. The complaint further alleges that Symons and Kline controlled CTI and actively participated in CTI’s unlawful conduct.
Two California-based relief defendants named
The CFTC complaint also names as relief defendants California companies Snonys, Inc. and Dragonfyre Magick Incorporated, allegedly owned or operated by Symons and Kline, respectively. The relief defendants allegedly received funds as a result of the defendants’ fraudulent conduct and have no legitimate entitlement to those funds.
In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains from the defendants and the relief defendants, restitution, civil monetary penalties, permanent trading and registration bans, and preliminary and permanent injunctions against further violations of the Commodity Exchange Act and CFTC regulations, as charged.
CFTC establishes special toll-free call-in number for alleged victims
The CFTC has established a special toll-free call-in number – 1-866-720-9071 – for CTI’s clients to leave messages for the CFTC’s Division of Enforcement.
The CFTC appreciates the assistance of the National Futures Association.
CFTC Division of Enforcement staff members responsible for this case are R. Stephen Painter, Jr., Laura A. Martin, Michael C. McLaughlin, David W. MacGregor, Lenel Hickson, Jr., Stephen J. Obie, and Vincent A. McGonagle.