Gold. In reviewing the Companies’ motion to dismiss in that case, the U.S. District Court for the Northern District of Illinois determined that section 6(c)(1) under the CEA and CFTC regulation 180.1 thereunder were intended to reach only fraudulent conduct. While Monex Grupo claims it had nothing to do with the Ponzi scam and has filed a criminal complaint against Zavala, its expatriate customers are the ones who are dealing with significant losses. section 9(1) (emphasis added); see also CEA section 13a-1(a), 7 U.S.C. Monex Pay enables clients to trade same-day, tomorrow and spot contracts, while related cross-border payments are made with speed, accurately and securely using SWIFT and domestic settlement networks. According to Enforcement Director James McDonald, the case against Monex represents “one of the largest precious metals fraud cases in the history of the Commission.”. Accordingly, unless an exception applies (such as the 28-day exception), it is a violation of the CEA if a retail futures transaction occurs off of a DCM and not through an FCM. Under CEA section 2(c)(2)(D)(iv), an agricultural producer, packer, or handler is considered to be an “eligible commercial entity” for any agreement, contract, or transaction for a commodity in connection with the line of business of the agricultural producer, packer, or handler. The CFTC will likely pursue manipulation or fraud claims under CEA section 6(c)(1) not only with respect to derivatives (futures, swaps, and options) but also with respect to commodities. Christine Parker View … Specifically, the company is accused of selling its “off-exchange” Atlas leveraged precious metals trading service to customers as a safe and reliable way to invest in gold, silver, platinum and palladium despite the fact that it operates entirely outside of the regulatory system of exchanges established and required by the Commodity Exchange Act of 1936 (which the CFTC exists to enforce) and the Dodd-Frank Act of 2010, and despite total Atlas retail customer losses between July 16, 2011 and March 31, 2017 of more than $290 million USD. Instead, the company and its agents overstated the profits that could be earned through participation in their Atlas program. © 2021 Reed Smith LLP. Discussion. Palladium Prices. 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The Monex court addressed two fundamental issues: (1) what constitutes “actual” delivery of a precious metal (that is, a commodity) and (2) whether, for purposes of section 6(c)(1) of the Commodity Exchange Act (CEA),2 the CFTC must allege both fraud and manipulation or whether fraudulently deceptive activity without manipulation of the markets is sufficient. For example, cryptocurrency wallet providers that perform cryptocurrency trading on a leveraged or margined basis on behalf of retail participants may become subject to the CEA’s requirement that the wallet provider conduct futures trades on a DCM and that it registers as an FCM if carrying out such trades. Monex Group Inc - To Buy Back Up To 3.76% Of Own Shares Worth 4 Billion Yen Through Aug. 16 Monex Group To Slash Minimum Fee On Purchases Of U.S. Stocks To 10 Cents From $5 - Nikkei The court was not persuaded by the arguments that virtually every transaction involving securitization or a leveraged sale or “even everyday grocery sales” will fail to meet the test of “actual delivery”.15 It appears that the court focused on the level of control over the physical commodity and concluded in the Monex case that the totality of circumstances indicated that Monex had retained full control over a commodity. The following is their statement in its entirety: Today the Commodity Futures trading Commission (“CFTC”) filed an action in federal court against Monex Deposit Company, Monex Credit Company (collectively “Monex”), et al., alleging that Monex’ leveraged Atlas account trades are illegal retail precious metals transactions under the recent Dodd-Frank legislation. Silver. The court concluded that section 6(c)(1)’s language is unambiguous – “[a]uthorizing claims against manipulative or deceptive conduct means what it says: the CFTC may sue for fraudulently deceptive activity, regardless of whether it was also manipulative.”18. L. No. $25.47-1.76. sections 80a-1 et seq., certain commodity pools, and other regulated entities. Prompted by a number of CFTC enforcement actions, the Dodd–Frank Act6 amended the CEA by categorizing commodity transactions with non-eligible contract participants7 (that is, retail participants)8 on a leveraged or margined basis as “futures trades.” Traditionally, under the CEA, all futures trades must be carried out on a designated contract market (DCM) (that is., a commodity exchange) and through registered futures commission merchants or brokers (FCMs). Go. The suit alleges that Monex and its affiliated companies and agents defrauded customers of “hundreds of millions of dollars”. 0 Details Completed. The three companies, based out of Newport Beach, California, are Monex Deposit Company, Monex Credit Company, and Newport Services Corporation. Newport Service Corporation primarily provides administrative and accounting services to MDC and MCC, but it can also accept payment from customers for Atlas trades. CoinWeek does not buy or sell coins or numismatic material and No endorsement or affiliation to or from CoinWeek.com is made. Add Details. Custodians of commodities must take greater care to ensure that “actual delivery” has occurred for purposes of the 28-day exception – a mere book entry is not sufficient; It remains to be seen how the Monex decision will apply to “actual delivery” for crypto-assets, given the CFTC’s prior interpretation. A sales team of telemarketers is employed to convince customers to partake in the services of the Atlas program. Go. section 78j(b) (prohibiting the use of manipulative or deceptive device in connection with the purchase or sale of securities). In it the U.S. Commodity Futures Trading Commission (CFTC) appeals the district court’s recent dismissal of its enforcement action against Monex Credit Company, alleging that Monex operated an illegally unregistered commodity trading platform. The CFTC Lawsuit against Monex demonstrates how important it is for investors to do their due diligence before investing in gold or silver.. Great Prices. On March 4, 2009, Monex Deposit Company and Monex Credit Company (collectively "Monex"), two companies in the precious metals business, filed a lawsuit suit against Jason Gilliam, Richard Gilliam, and Steven Bowman for publishing allegedly defamatory statements on the website MonexFRAUD.com and attempting to extort money from Monex. Metal 's Petten, a retiree in Querétaro, was one of Atlas! Sometimes slightly redacted ) versions of the company that makes retail precious metals trading regulated Authorised Institution. 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