Washington, D.C. — The Commodity Futures Buying and selling Fee at this time introduced it filed a criticism within the U.S. District Court docket for the District of New Jersey in opposition to Murtuza Kazmi, previously of Phillipsburg, New Jersey, and his corporations, Merchants International Group Inc., a New Jersey company and Merchants International Group Inc., a Canadian enterprise group, all doing enterprise as “My Foreign exchange Funds.” The criticism fees them with fraudulently soliciting clients to commerce leveraged, margined, or financed retail international alternate (retail foreign exchange), and leveraged retail commodity transactions.
On August 29, U.S. District Court docket Decide Robert B. Kugler signed a statutory restraining order freezing the defendants’ property; requiring the defendants to submit their books and information to examination by the CFTC; and appointing a short lived receiver. A listening to on the CFTC’s movement for preliminary injunction is scheduled for September 11 earlier than Decide Zahid N. Quraishi in Trenton, N.J.
In its persevering with litigation, the CFTC seeks restitution to defrauded buyers, disgorgement of ill-gotten beneficial properties, civil financial penalties, everlasting buying and selling and registration bans, and a everlasting injunction in opposition to additional violations of the Commodity Trade Act (CEA).
“The CFTC’s case in opposition to the ‘My Foreign exchange Funds’ defendants is emblematic of our dedication to stamping out retail fraud in our markets,” mentioned Director of Enforcement Ian McGinley. “Anybody providing or getting into into leveraged retail foreign exchange contracts with out registration, or providing or getting into into leveraged retail commodity contracts off-exchange, is appearing in clear violation of the regulation.”
Case Background
In keeping with the criticism, the defendants, doing enterprise as “My Foreign exchange Funds,” supposedly supplied retail clients the chance to turn into “skilled merchants” by utilizing Merchants International’s cash to commerce in opposition to third-party “liquidity suppliers” and share in any buying and selling income. They assured clients that “your success is our enterprise,” and “we solely make cash if you do.” However, in actuality, Merchants International—not a third-party “liquidity supplier”—is the counterparty to considerably all buyer trades.
The criticism additionally alleges that Merchants International actively minimizes the probability that clients commerce profitably by utilizing pretexts to terminate buyer accounts, misleadingly assessing commissions that scale back buyer account fairness, secretly utilizing specialised software program to trigger buyer orders to be executed at worse costs than appeared to the client on the time an order was despatched, and handicapping the extraordinarily small variety of profitable clients to lower buyer income and improve buyer losses.
Because the criticism famous, the Merchants International pitch has been profitable, and greater than 135,000 clients have signed up for his or her buying and selling program since November 2021, paying eventually $310 million in charges. The criticism alleges Kazmi used proceeds from the fraud to buy luxurious properties and cars, and make tens of tens of millions of {dollars} in transfers to his private accounts.
Associated Worldwide Motion
In a separate motion, on August 29, the Ontario Securities Fee issued a short lived stop commerce order that features a prohibition in opposition to all buying and selling in any securities by Merchants International Group Inc. and Murtuza Kazmi.
The CFTC appreciates the help of the Ontario Securities Fee.
The Division of Enforcement workers chargeable for this matter are Ashley J. Burden, Katherine Paulson, Matthew Edelstein, Stacie Pan, Elizabeth M. Streit, Scott Williamson and Robert Howell.
* * * * * * *
CFTC Fraud Advisories
The CFTC has issued a number of buyer safety Fraud Advisories and Articles that present details about how clients can detect, keep away from, and report scams.
The CFTC additionally strongly urges the general public to confirm an organization’s registration with the CFTC earlier than committing funds. If unregistered, a buyer ought to be cautious of offering funds to that firm. An organization’s registration standing will be discovered utilizing NFA BASIC.
Clients and different people can report suspicious actions or info, akin to attainable violations of commodity buying and selling legal guidelines, to the Division of Enforcement by way of a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint on-line, or contact the Whistleblower Office. Whistleblowers could also be eligible to obtain between 10 and 30 p.c of the financial sanctions collected paid from the CFTC Buyer Safety Fund financed by financial sanctions paid to the CFTC by violators of the CEA.
