Securities Industry Commentator by Bill Singer Esq

November 29, 2017

The CFTC obtained a Consent Order in the United States District Court for the Central District of California against Defendants Joseph Dufresne (a/k/a/ Joseph James) and Megan Renkow (a/k/a Megan James), both of Palos Verdes Estates, California, and their companies, United Business Servicing, LLC and United Business Servicing, Inc. (collectively, United Business), doing business as (SoT), who were charged with fraud and other violations in connection with the offer and sale of futures trading strategies and systems. The Defendants are jointly/severally liable to pay over $3.9 million in restitution and $1 million in a civil monetary penalty. READ the FULL TEXT CFTC Consent Order

As set forth in the CFTC Press Release in part, the Defendants:

1) touted the profitability of SoT's trading strategies and systems and claimed hundreds of thousands of trading profits earned every year when, in fact, none of Defendants' accounts has ever been profitable; 2) falsely represented to customers and prospective customers that Dufresne was a successful professional trader with years of experience and numerous awards when, in fact, Dufresne has little experience, has never been professionally recognized, and has never been a profitable trader; and 3) purported to make profitable trades in live accounts in real time in SoT's "Live Trade Room" when, in fact, none of the trades called or profits claimed to have been made in the "Live Trade Room" can be found in any of Defendants' accounts. Additionally, the Court found that Defendants failed to prominently display in their various solicitation materials certain disclosure statements required under CFTC Regulations concerning simulated or hypothetical trading results and client testimonials.

Remarks at the Third Annual Conference on the Evolving Structure of the U.S. Treasury Market (SEC Chairman Jay Clayton Speech) In his remarks, SEC Chair Clayton covered the regulatory coordination inherent in global capital markets' oversight; the importance of trading data for the Treasury market; and the SEC's approach to the future regulation of certain other aspects of the fixed income markets. READ SEC Chair Clayton's FULL TEXT Speech

In addressing his second topic of trading data, Chair Clayton said, in pertinent part:

Let me begin by stating my view that regulators should have access to comprehensive Treasury market trading data.  As I mentioned, but it bears repeating, the Treasury market is fundamental to our economy.  It serves as the primary means of financing the federal government.  It is the deepest and most liquid government securities market in the world.[5]  That is just the beginning.  Treasury securities and the Treasury market perform many key roles in the global financial system, including serving as a key investment instrument and hedging vehicle for investors around the world, and as a widely-accepted benchmark for many other financial instruments, to name just a few. 

Therefore, we at the SEC, as well as the other authorities responsible for this market and other markets, need a clear and precise understanding of the trends, dynamics and risks in the Treasury market.  The need for readily available Treasury market data was made clear by the events of October 15 - a little over three years ago.  It has been noted that much of the eight months that it took for the interagency working group to produce the joint report regarding the events of October 15 was spent on data collection, data reconciliation and analysis across the agencies.[6] 

That said, a significant step forward occurred last October when the SEC, in consultation with the Treasury Department and other regulators, approved a FINRA rule change that requires FINRA member broker-dealers to report[7] transactions in Treasury securities to FINRA's TRACE system.[8]  So, as of the effective date this July, regulator access to Treasury security data is much improved, in both scope and timing. 

UPDATE: SEC Says No Mulligans For FINRA Settlements ( Blog) 

In the current installment of this regulatory saga, Bruce M. Zipper sought a stay from the Securities and Exchange Commission pending his appeal of FINRA's denial of permission for his continued association with a member firm attendant to his statutory disqualification. READ