Nadex revokes membership of Capstone Currency owner
Markeith Victoria acknowledged having discussions with another Nadex participant for the sole purpose of entering orders on the Exchange that would trade opposite one another.
Shortly after North American Derivatives Exchange (Nadex), a subsidiary of IG Group Holdings plc (LON:IGG), took disciplinary action against one of its members whose deposits were linked to unregistered entity Capstone Currency, the Exchange has taken a disciplinary action against another member whose activities are related to Capstone Currency.
In a notice on its website, Nadex says it has revoked the membership of Markeith Victoria over violations of Nadex rules.
In particular, an investigation into the trading activity conducted by Markeith Victoria has shown that Victoria had prearranged multiple transactions on the Exchange between November 15, 2017 and November 22, 2017 with another Nadex Member. During the course of the investigation, Markeith Victoria acknowledged having discussions with the other Nadex participant for the sole purpose of entering orders on the Exchange that would trade opposite one another. Accordingly, Markeith Victoria was found to have violated Rule 5.19(b) which prohibits entering into any non-competitive trade on the Exchange, when he discussed and effectuated prearranged trades with another Nadex Member.
Furthermore, during the course of the investigation, Nadex learned that Markeith Victoria owned and operated Capstone Currency, LLC, which he described as an investment fund consisting of nine third-party investors. The entity is not registered with the Commodity Futures Trading Commission in any capacity, nor has it claimed an exemption from registration.
On October 24, 2017, Victoria transferred funds into his Nadex account from his personal bank account to support his trading activity on the Exchange. Nadex’s investigation revealed that the original source of these funds appears to have been the Capstone Currency, LLC bank account, specifically tracing back to a third-party investor. The funds were transferred from the investment fund to Victoria’s personal bank account, and ultimately to his Nadex account for trading.
Finally, in reviewing bank statements provided by another Nadex Member, Julio Salgado Velez, Nadex became aware of a $101,000 transfer between Capstone Currency, LLC and Velez, which ultimately resulted in deposits to Nadex. Victoria failed to respond to several requests for information regarding this transaction and refused to cooperate further.
Victoria was found to have violated both Rule 5.19(l) when he solicited customer funds for deposit into his unregistered entity Capstone Currency, LLC, which were ultimately deposited to Nadex for trading, and Rule 5.19(m) for operating Capstone Currency, LLC in a manner that would likely require registration with the Commodity Futures Trading Commission. Further, Victoria violated Rule 3.3(a) and Member Acknowledgements and Authorizations, Section (h) of the Nadex Membership Agreement when he failed to fully cooperate with Nadex during the course of the investigation.
Due to the violations, Markeith Victoria was fined $2,500, and his Membership was revoked. Mr Victoria has also been permanently banned from trading on the Nadex markets, either directly for his own account or through an intermediately, or as an authorized trader on behalf of any other account.