The U.S Commodity Futures Trading Commission has ordered a chief compliance officer to pay $150,000 for engaging in fraudulent acts and making false statements to a self-regulatory organization.
In its order, filed Sept. 12, the CFTC settled charges against CFTC registrant Rafael Marconato of Limeira, São Paulo, Brazil, requiring him to pay $125,000 in restitution and a $25,000 civil penalty for engaging in acts of fraud on pool participants and making false statements to the National Futures Association (NFA), the self-regulatory organization for the U.S. derivatives industry.
“The CFTC expects registrants to take their duties seriously and will take action against those who engage in fraud or make false statements,” said CFTC Director of Enforcement James McDonald in a statement. “The reach of our enforcement efforts does not stop at our borders—we will root out fraud and misconduct in our markets no matter where it originates.”
Marconato was chief compliance officer of a registered commodity pool operator and commodity trading advisor who solicited clients to invest in commodity pools and managed accounts operated and offered by the firm. According to the order, the firm and its CEO misappropriated client funds, and the CEO lied to the NFA to conceal the fraud. In May 2019, the CFTC filed a civil enforcement action in the U.S. District Court for the Southern District of New York against the CEO and the firm.
The CFTC order finds Marconato made false statements to the NFA by denying the existence of that commodity pool, instead claiming the firm had no customers. The order further finds Marconato attempted to mislead the NFA to believe the commodity pool he had been soliciting for was a company that invested in software and sent the NFA a false document repeating that claim. As also set out in the order, Marconato sold part of his interest in the firm’s commodity pool to an existing pool participant for $125,000 without disclosing he was selling part of his own interest.
In addition to paying restitution and a civil monetary penalty, Marconato is permanently prohibited from trading commodity interests for himself or others, soliciting or accepting funds from others for the purpose of trading commodity interests, and from registering with the CFTC. The order also requires Marconato’s cooperation in the CFTC’s ongoing litigation against other parties. The amount of the civil monetary penalty recognizes Marconato’s “substantial” cooperation with the CFTC Division of Enforcement, the agency stated.