Currency Trading International, Inc., et al.
On May 10, 2007, the Court appointed Richard Weissman as Distribution Agent to distribute certain funds to the former options customers of Currency Trading International (CTI). The U.S. Department of Justice had previously seized certain funds belonging to the CTI defendants in a related matter in Cleveland, Ohio. These funds were recently transferred to the Distribution Agent for distributions to the CTI options customers.
The Distribution Agent has sent notices to potential claimants at their last known addresses in the records, including a Proof of Claim form and Supplemental Claim Form, Notice of the Last Day to File Claims and an Explanation of the Claims Process. The bar date for the filing of claims (the last date by†when the Proof of Claim must be postmarked) is on or before May 31, 2009.
Background: On January 6, 2000, the SEC filed a civil enforcement action against Currency Trading International, Inc. (CTI), a broker-dealer, its owners, Brian R. Moore and Craig A. Cunningham, and several of CTIís managers in connection with their alleged misrepresentation about the likelihood of profits in trading options to its customers.
According to the complaint, from 1994 through 1998, the defendants generated over $16 million in commissions from more than 900 investors in connection with an alleged high pressure sales campaign to fraudulently offer and sell foreign currency options. Specifically, the SEC alleged that CTIís registered representatives misrepresented the potential profits associated with the foreign currency options trading, often telling clients they were likely to double or triple their investment within a short time. In fact, the SEC alleged that such high returns were extremely unlikely because of the speculative nature of foreign currency options and the high commissions charged by CTI on both the purchase and sale of each option. The SEC also alleged that registered representatives misrepresented account values, pressured clients to continue trading, refused to follow client instructions to sell positions and refused to return funds. As it turned out, the SEC alleged that virtually no client ever closed an account at a profit.
In February 2004, after a three week trial, the District Court for the Central District of California found in favor of the SEC. In May 2004, the Court entered a Revised Final Judgment that, among other things, ordered Moore to pay disgorgement of $4,361,993.00 plus prejudgment interest of $1,142,431.13 and Cunningham to pay disgorgement of $4,361,993.00 plus prejudgment interest of $1,142,431.13. The Court also ordered CTI to pay disgorgement of $32,844,444.24 plus prejudgment interest of $8,602,149.45.
Cunningham appealed the Judgment to the Ninth Circuit and then to the U.S. Supreme Court by way of a Petition for Writ of Certiorari. The Judgment was affirmed at the appellate level and the Petition for Writ of Certiorari was denied.
For more information about the SECís action, the SEC has posted numerous administrative and litigation releases on its website.