CFTC Sanctions Commodity Pool Operator with $13 Million

The US Commodity Futures Trading Commission (CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term) announced on Thursday that it imposed sanctions against an unregistered commodity pool operator, who was ordered to pay over $13 million.

According to the press release, David Seibert from Lakeway, Texas, is accused of running a commodity fraud and was found liable for solicitation fraud and the misappropriation of client funds. A permanent registration ban and trading ban were also imposed by the court, which prohibited him from violating the Commodity Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Act in the future.

Over $10 million was fraudulently solicited and accepted by Seibert from 11 participants from March 2016 to April 2019. During the time, Seibert claimed to use participant funds for short-term, high-interest, secured 'bridge loans' to third-party borrowers for the purpose of making property repairs while they sought permanent financing.

According to Seibert, he would find the lending opportunities, confirm that the borrower was qualified, and then close and service the loan. However, no loans were originated by Seibert. As a result, Seibert used most of the funds to trade commodity interests in his personal trading account, where he lost over $8.3 million. Funds from other participants were used for personal expenditures by him.

Seibert has been ordered to pay $10,794,508 in restitution to victims of his scheme and $2,278,853 in civil penalties.

Recent Investigations

Recently, the US regulator announced that it had filed a civil enforcement action against a South African man, Cornelius Johannes Steynberg, and an unregistered commodity pool operator, Mirror Trading International Proprietary Limited (MTI).

Both parties were charged with fraud and registration violations before the US District Court of the Western District of Texas. This action comes a few days after the CFTC slammed a $1.37m fine on Starberry Limited for acting as a futures commission merchant without a permit.