NY Court orders Global FX Club to pay penalty of $1.1m

Maria Nikolova

From approximately 2010 through June 2017, Global FX Club fraudulently solicited pool participants to invest in a commodity pool for Forex trading.

Judge Laura Taylor Swain of the New York Southern District Court has issued an Order of Final Judgment by Default for Permanent Injunction, Civil Monetary Penalties, and Other Statutory and Equitable Relief against Wright Time Capital Group LLC (WTGG), doing business as Global FX Club.

On Friday, December 7, 2018, the Court granted a motion for default judgment sought by the Commodity Futures Trading Commission against Global FX Club.

Let’s recall that, on June 22, 2017, the CFTC filed a Complaint charging defendants Michael S. Wright and WTCG, aka Global FX Club, with violations of the Commodity Exchange Act and Commission Regulations.

According to the Complaint, from approximately 2010 through June 2017, WTCG fraudulently solicited pool participants to invest in a commodity pool for forex trading. The fraudulent solicitations included misrepresentations that all of participants’ funds would be pooled and used to engage in FX trading. In reality, however, WTCG did not use all of pool participants’ funds for Forex trading and instead misappropriated pool participants’ funds for unauthorized personal and business expenses.

WTCG, through its officers, employees, and agents, made false account statements that inflated and misrepresented the value of pool participants’ accounts and the pool’s trading returns. In fact, there was an overall significant decrease in the net value of the pool due to the combined effect of Wright’s unprofitable forex trading and misappropriation.

WTCG is alleged to have defrauded and willfully deceived the pool participants by, inter alia

  1. misrepresenting to prospective pool participants that all or substantially all of participants’ funds would be pooled and used to engage in forex trading;

  2. sending pool participants false account statements that inflated and misrepresented the value of their accounts and the pool’s trading returns;

  3. misrepresenting that pool participant funds were available for withdrawal; and

  4. misappropriating pool participants’ funds for unauthorized personal or business expenses rather than engaging in retail forex trading and failing to disclose that pool participants’ funds had been misappropriated.

As per the Court’s Order, WTCG is permanently restrained, enjoined and prohibited from defrauding any other person, willfully making or causing to be made any false report or statement or willfully entering or causing to be entered any false record, or willfully deceiving any other person in connection with any order to make any contract of sale of any commodity for future delivery, or swap, that is made for or on behalf of any other person. WTGG is also prohibited from operating or soliciting funds for a pooled investment vehicle that is not an ECP in connection with forex transactions. The defendant is also prohibited from entering into any transactions involving “commodity interests”.

The Court ordered WTCG to pay a civil monetary penalty in the amount of $1,113,750, plus post-judgment interest. The defendant will also have to pay restitution in the amount of $371,250.

The case was officially terminated on December 7, 2018.

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