CFTC secures permanent injunction order against WG Trading

Maria Nikolova

Given the amount of money the Receiver has returned to victims of Walsh’s, Greenwood’s and the WG Corporate Defendants’ fraudulent scheme, the CFTC asks for no further monetary relief.

There has been some development in an action launched by the United States Commodity Futures Trading Commission (CFTC) against the entities responsible for a $1.3 billion investment scam back in February 2009.

Back then, the CFTC charged Stephen Walsh and Paul Greenwood with misappropriating at least $553 million from commodity pool participants in connection with entities they owned and controlled, such as Westridge Capital Management, Inc., WG Trading Investors, LP, and WGIA, LLC.

On June 26, 2019, Judge George B. Daniels of the New York Southern District Court signed an Order of Permanent Injunction against Westridge Capital Management, WG Trading Investors, and WGIA LLC, as well as against the relief defendants in this case – WG Trading Company, Westridge Capital Management Enhancement Funds, WGI LLC, and K&L Investments.

Under the Order, the WG Corporate Defendants Westridge, WGTI, and WGIA are permanently restrained, enjoined and prohibited from directly or indirectly, in or in connection with any order to make, or the making of, any contract of sale of any commodity in interstate commerce or for future delivery that is made, or to be made, on or subject to the rules of a contract market, for or on behalf of any other person to cheat or defraud or attempt to cheat or defraud the other person; or willfully to deceive or attempt to deceive the other person by any means whatsoever in regard to any order or contract or the disposition or execution of any order or contract, or in regard to any act of agency performed, with respect to any order or contract for the other person.

The WG Corporate Defendants’ violations of the Act and Regulations merit the award of monetary relief. The Court recognizes, however, that the Receiver has returned, to date, $978,332,414.93 of the funds (out of a total $1,007,085,955.60 in allowable claims) to victims of Walsh’s, Greenwood’s and the WG Corporate Defendants’ fraudulent scheme. In addition, the Court has also found and concluded that

  1. any funds or other assets held by, or due to be received by, the WG Corporate Defendants WGTI, WGIA, and Westridge, were all causally connected to Walsh’s and Greenwood’s violative conduct;

  2. the aforementioned WG Corporate Defendants have no legitimate claim to retain any such funds or other assets; and

  3. that any and all funds or other assets held by the WG Entities have been subsumed and have become part of the receivership estate, and the vast majority of such funds either have been, or will be, distributed to claimants pursuant to distribution plans approved by this Court.

Thus, the Court deems the award of monetary relief to the CFTC to be satisfied by these facts, including the $978,332,414.93 returned to victims to date, and thus concludes that no further relief is required.

The CFTC’s complaint charged Walsh and Greenwood with futures fraud and misappropriation of pool funds.

The CFTC complaint alleged that, from at least 1996 to the time of the filing of the Complaint in 2009, Walsh and Greenwood fraudulently solicited approximately $1.3 billion from individuals and entities through Westridge Capital Management, WG Trading Investors, LP, and other entities. The complaint charged that the defendants defrauded victims by falsely depicting that all pool participants’ funds would be employed in a single investment strategy that consisted of index arbitrage. However, pool participants’ funds were transferred to another entity from which Walsh and Greenwood siphoned funds, according to the complaint.

According to the complaint, to cover-up their misappropriation of pool participants’ funds, Greenwood and Walsh manufactured promissory notes to present the appearance that pool participants’ funds had been loaned to them.

Walsh and Greenwood allegedly misappropriated approximately $553 million in pool participants’ funds. More than $160 million was used for Walsh and Greenwood’s personal expenses, including purchasing rare books, horses, Steiff teddy bears for as much as $80,000, and a $3 million residence for Walsh’s ex-wife.

Read this next

Digital Assets

Zero Hash obtains AUSTRAC registration in Australia

Seed CX is expanding the reach of its crypto settlement solution, dubbed ‘Zero Hash,’ which has registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC) as a digital currency exchange provider.

Digital Assets

UK advertising watchdog slams Arsenal over misleading crypto ads

The UK advertising watchdog has reprimanded Arsenal Football Club for promoting crypto assets without warning fans of the potential associated risks.

Retail FX

Swissquote profit slips as crypto revenue falls by two thirds

Swissquote Group, Switzerland’s provider of online trading services, reported that its H1 revenues dropped by nearly a quarter from a year ago as clients’ interest in crypto trading stagnated.

Digital Assets granted approval to operate business in Cayman Islands, one of the longest-established crypto platforms, has obtained a new registration in the Cayman Islands under the Virtual Asset Services Providers Act.

Executive Moves

United Fintech hires Mitch Vine and Danny Finnerty to expand US footprint

“United Fintech’s expansion in the US is pivotal to our mission of helping financial institutions digitize and gain access to best in class capital markets focused technology.”

Digital Assets

Ankr backed by Binance Labs after several initiatives in support of BNB Chain

Ankr has made a series of upgrades to the BNB Chain, including Erigon, the Archive Node, and the latest BNB Application Sidechain (BAS) scalability solution.

Retail FX

Financial Commission terminates membership of LordFX

The Financial Commission, an independent self-regulatory compliance specialist for the financial services industry, has expelled forex brokerage LordFX from its membership, according to a FinaCom statement.

Industry News

Match-Prime Liquidity sponsors Cypriot football club Omonoia FC

“We feel privileged to support Omonoia as it’s one of the largest teams in Cyprus, fandom size-wise, and we know it has a special connection with its supporters.”

Institutional FX

XTB’s X Open Hub adds 30 cryptos to white label offering for brokers

Its solutions include deep institutional liquidity on more than 5,000 global instruments, such as indices, shares, forex, cryptocurrencies, commodities, and ETFs, and a white label platform that can be fully customized and branded for each brokerage.