Federal regulators have filed charges against two Louisiana companies and their founder for allegedly orchestrating a multi-million dollar Forex (FX) trading fraud that targeted dozens of investors.

CFTC Alleges $7.6 Million Forex Trading Scheme

The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against NOLA FX Capital Management, LLC, Meteor, LLC, and their founder Michael B. DePetrillo in the US District Court for the Eastern District of Louisiana. The regulator alleges the defendants reportedly operated an elaborate scheme that defrauded at least 40 individuals out of approximately $7.6 million.

According to the CFTC's complaint, DePetrillo and his companies allegedly ran an unregistered commodity pool operation from July 2017 until the present, promising investors their money would be used for foreign currency trading through an entity called NOLA FX Fund, LLC.

“The defendants allegedly sent false account statements to pool participants showing purported profits and trading activity, when in fact none existed,” CFTC commented. “Instead of trading as promised, the defendants misappropriated pool funds. The defendants used these misappropriated funds to make payments to existing pool participants in a manner akin to a Ponzi scheme Ponzi Scheme A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and Read this Term, pay DePetrillo’s personal expenses and to conduct personal trading in DePetrillo’s personal trading accounts.”

.@CFTC Charges two Louisiana-Based Companies and Cofounder with Multi-Million Dollar Forex Fraud, Failing to Register: https://t.co/4BekMWnh8B

— CFTC (@CFTC) October 28, 2024

The case has also caught the attention of criminal authorities, with the US Attorney's Office for the Eastern District of Louisiana filing parallel criminal charges against DePetrillo.

Recent CFTC Actions

In August, the CFTC fined NinjaTrader Clearing, LLC (NTC) $983,425 for inadequate oversight of employee conduct in handling accounts linked to a fraud case. The Illinois-based firm, a futures commission merchant, failed to act promptly on a statutory restraining order that mandated freezing or restricting the affected accounts.

Additionally, two months ago, the CFTC imposed a $22 million fine on Nasdaq Futures, Inc. for regulatory violations related to its Designated Market Maker (DMM) program, which ran from July 2015 to July 2018 and incentivized energy futures contract trades.

In the meantime, the conflict between US regulators and cryptocurrency firms has intensified, with nearly $32 billion collected in settlements since 2019, according to CoinGecko. The CFTC has spearheaded many of these efforts, with its most notable action targeting the defunct crypto exchange FTX and its affiliate, Alameda. In August 2024, nearly two years after FTX's collapse, the CFTC announced a $12.7 billion penalty settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term against these companies.