CFTC Orders Mark Adrian to Pay $140,000 Civil Penalty in Fraudulent Forex Scheme

Adrian pleaded guilty to federal criminal wire fraud and faces sentencing on August 2, 2011.

Washington, DC ― The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges against Mark Adrian of Delray Beach, Fla., for his role in issuing false statements to customers in a fraudulent foreign currency (Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term) scheme. The CFTC order requires Adrian to pay a $140,000 civil monetary penalty and prohibits him from trading for or on behalf of any other person and applying for registration with the CFTC. Adrian is currently not registered with the CFTC.

The CFTC order finds that, from approximately 2005 through approximately August 2008, KJW Capital Management, LLC (KJW), where Adrian was an employee and member, solicited customers — directly and indirectly through brokers — to open managed accounts in which KJW would trade off-exchange forex on behalf of these customers. KJW used purported proprietary trading methodologies and obtained more than $18.4 million from at least 58 customers, according to the order. KJW traded forex in individual customer accounts at Avidus Trading, LLC (Avidus), where Adrian was also an employee and member, and where all of KJW’s customers were required to open and maintain Forex Trading Forex Trading Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another. The Forex market is the world’s biggest and most liquid market, with over $5 billion turnover every single day, with the market being open 24 hours a day, 5 days a week.It goes without saying Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another. The Forex market is the world’s biggest and most liquid market, with over $5 billion turnover every single day, with the market being open 24 hours a day, 5 days a week.It goes without saying Read this Term accounts, according to the order.

Customers suffered significant forex trading losses, and, instead of informing customers of these losses, Adrian created false bank records and spreadsheets to hide the losses from customers, the order finds. For example, one of Avidus’ Dresdner Bank (Dresdner) account statements that Adrian falsified had the same font, color and account number as the actual Dresdner statement; however, the balances were vastly different, the order finds. The actual Dresdner balance totaled $181,000, whereas the Dresdner balance per Adrian was $2,488,000, according to the order.

The information contained in these false bank records and spreadsheets became the basis for numerous oral and written material misrepresentations and omissions made to customers, the order finds. By these misrepresentations and omissions, Adrian deceived customers into not withdrawing their funds, which resulted in customers suffering losses of at least $2.3 million, according to the order.

In a related criminal proceeding, the U.S. Attorney’s Office for the Northern District of Illinois filed an information against Adrian on September 13, 2010 (Case No. 1:10-cr-00754). Adrian pleaded guilty to wire fraud on October 26, 2010. Sentencing is scheduled for August 2, 2011.

The CFTC thanks the U.S. Attorney’s Office for the Northern District of Illinois, the Federal Bureau of Investigation and the U.K.’s Financial Services Authority for their assistance in this matter.

CFTC staff members responsible for this case are Charles Marvine, Rick Glaser and Richard Wagner.

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