CFTC brings fraud charges against self-proclaimed Forex “master trader”

Maria Nikolova

Primarily using social-media platforms and email, James Frederick Walsh fraudulently marketed himself as a highly successfully Forex trader.

The United States Commodity Futures Trading Commission (CFTC) has brought fraud charges against self-proclaimed FX “master trader” James Frederick Walsh. The CFTC complaint against Walsh was filed on July 7, 2020, at the Texas Western District Court.

The complaint, seen by FinanceFeeds, alleges that from at least September 2019 to the present, Walsh fraudulently solicited members of the public for the purported purpose of trading off-exchange leveraged or margined retail FX on their behalves. Primarily using social-media platforms YouTube and Craigslist, and email, Walsh fraudulently marketed himself as a highly successfully forex trader who generated for his clients “average monthly returns of 8% -11%” or “a flat 3% guaranteed profit each month.” To achieve these fictitious results, Walsh falsely claimed to have access to “legal, inside information” about the direction in which Forex markets will move.

More recently, and after he received a cease and desist letter from the Texas State Securities Board related to his fraudulent solicitations – Walsh falsely represented that he was earning even greater trading profits now that the COVID-19 pandemic had impacted the financial markets, claiming that “the returns in forex continue to grow as the rest of the financial world continues to suffer.”

Via these solicitations, Walsh misrepresented and/or omitted material facts by, falsely describing his trading experience, trading skills, and trading results. He also failed to advise clients that he had no U.S.-based forex trading accounts and was not listed on any US-based Forex trading account as holding discretionary trading authority on behalf of the account holder(s).

Furthermore, he failed to inform clients that he was not registered with the CFTC to act as a commodity trading advisor (CTA), and therefore was operating an unlawful business venture.

Also, he did not inform existing and/or prospective clients that the Texas SSB had issued him a cease and desist letter as a result of his fraudulent solicitations, which he was failing to obey.

The CFTC alleges that Walsh has engaged, is engaging, and is about to engage in fraud in violation of Sections 4b(a)(2)(A) and (C), and 4o(1) of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. §§ 6b(a)(2)(A), (C), 6o(1) (2018), and Commission Regulation (“Regulation”) 5.2(b)(1) and (3), 17 C.F.R. § 5.2(b)(1), (3) (2019), and has operated, is operating, and may be about to operate as an unregistered CTA in violation of Sections 4m(1) and 2(c)(2)(C)(iii)(I)(bb) of the Act, 7 U.S.C. §§ 6m(1), 2(c)(2)(C)(iii)(I)(bb) (2018), and Regulation 5.3(a)(3), 17 C.F.R. § 5.3(a)(3) (2019).

In this action, the Commission seeks civil monetary penalties and remedial ancillary relief, including, but not limited to, trading and registration bans, restitution, disgorgement, rescission, an accounting, pre- and post-judgment interest, and such other relief as the Court deems necessary and appropriate.

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