Commodity Futures Trading Commission (CFTC), precious metals fraud and crime

Commodity Futures Trading Commission (CFTC) ……
 

On Thursday, September 22, 2022, the Commodity Futures Trading Commission (CFTC) issued an order filing and simultaneously settling charges against Goldline, Inc. and A-Mark Precious Metals, Inc., both California companies, for fraud in connection with off-exchange retail commodity transactions; failing to register as a Futures Commission Merchant (FCM); and engaging in illegal off-exchange retail commodity transactions. The order requires Goldline and A-Mark to disgorge $627,801.78 USD; pay, jointly and severally, a $450,000 civil monetary penalty; and to cease and desist from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

Case Background

The order finds that from approximately April 2018 to approximately June 2021, Goldline solicited and accepted customers’ orders for leveraged, margined, or financed precious metals transactions. Retail customers entered into these transactions, although they were not conducted on a designated contract market or derivatives transaction execution facility.

The order further finds that in offering the illegal transactions, Goldline engaged in sales solicitation fraud. Goldline misrepresented the percentage by which its bid price (i.e., the amount at which Goldline would purchase metals from its customers) would have to increase before the customers could break even if they chose to sell their metal back to Goldline. Goldline then misrepresented that it, rather than a third-party retail precious metals dealer, would offer to buy back metals that the customers previously purchased from Goldline. This misrepresentation contradicted what Goldline told its customers in solicitation materials and customer account agreements. Goldline’s management knew about these misrepresentations to customers and did not correct them.

As its principal, A-Mark is liable for Goldline’s violative conduct.

The Division of Enforcement staff members responsible for this case are Alan Edelman, James Deacon, Michelle Bougas, Erica Bodin, James Holl III, and Rick Glaser.

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CFTC’s Precious Metals Customer Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Precious Metals Fraud Advisory, which alerts customers to precious metals fraud and lists simple ways to spot precious metals scams.

The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found at NFA BASIC.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10% and 30% of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.
 

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