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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 50050 / July 21, 2004

ADMINISTRATIVE PROCEEDING
FILE NO. 3-11503


In the Matter of

CURRENCY TRADING
INTERNATIONAL, INC.,
CRAIG A. CUNNINGHAM,
JAMES R. KELSALL,
and CHRISTIAN J. WEBER

Respondent.


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ORDER MAKING FINDINGS AND IMPOSING SANCTIONS BY DEFAULT AGAINST CURRENCY TRADING INTERNATIONAL, INC., AND CHRISTIAN J. WEBER

The Securities and Exchange Commission (Commission or SEC) issued its Order Instituting Proceedings (OIP) on May 27, 2004. The Division of Enforcement has presented evidence that an agent for Respondent Currency Trading International, Inc. (CTI), received the OIP on June 29, 2004, and that an agent for Respondent Christian J. Weber (Weber) received the OIP on June 16, 2004.

Under the terms of Paragraph IV of the OIP and Rule 220 of the Commission's Rules of Practice, CTI's Answer was due no later than July 19, 2004, and Weber's Answer was due no later than July 6, 2004. CTI and Weber have not filed Answers and are therefore in default. As authorized by Rule 155(a) of the Commission's Rules of Practice, I find the following allegations of the OIP to be true as to CTI and Weber.

CTI is a Florida corporation. Its principal office was in Newport Beach, California, and it had other offices in San Diego, California, Cleveland, Ohio, and Akron, Ohio. CTI became registered with the Commission as a broker-dealer in December 1993 and was a foreign currency options participant on the Philadelphia Stock Exchange from the fall of 1994 through the fall of 1998. During its years of operation, CTI employed approximately 350 people, the vast majority of whom were registered representatives. CTI ceased conducting business on December 31, 1998, but has not requested to withdraw its broker-dealer registration with the Commission.

Weber, age 32, resides in Fountain Valley, California. He worked as a registered representative at CTI from June until December 1997, and then as a regional manager until January 1998. At the times relevant to this proceeding, Weber held Series 15 and 63 licenses.

On January 6, 2000, the Commission filed a complaint against CTI, Weber, and others in the United States District Court for the Central District of California. The case was entitled SEC v. Currency Trading International, Inc., Case No. CV 00-0012 AHS. The case was later reassigned to a different judge and became Case No. CV 02-5143 PA (CTx).

On February 2, 2004, the court issued its Findings of Fact and Conclusions of Law. On May 3, 2004, the court entered a Revised Final Judgment of Permanent Injunction, Disgorgement, Prejudgment Interest, and Civil Penalties against CTI, Weber, and others. The Revised Final Judgment enjoins CTI, Weber, and others from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5.

In the Revised Final Judgment, the court imposed a civil penalty of $550,000 against CTI, and a civil penalty of $110,000 against Weber. The court ordered CTI to disgorge $32,844,444.24, plus prejudgment interest of $8,602,149.45. The court further ordered Weber to disgorge $440,000, plus prejudgment interest of $115,238.54.

In relevant part, the court found that CTI operated as an illegal boiler room, in that CTI, Weber, and others sold speculative investments in foreign currency options through high-pressure sales tactics, soliciting new customers by telephone and deliberately creating a false expectation of gain without risk. CTI brokers downplayed the risk disclosures contained in the written documents by telling their customers that the documents were a mere formality or were "unduly negative." CTI brokers also told their customers falsely that they would "monitor the customer's account" and take action before the customer could lose money. Brokers repeatedly promised customers a false expectation of gain and then told customers to "trust us." CTI brokers told customers that they would "double or triple" their money within a week or even days. These statements were false.

The court also found that CTI refused to disclose to customers how CTI would manage their accounts. CTI refused to execute sell orders for customers, unless the customers also agreed to purchase another options position, i.e., that the customer must engage in a "net trade," the sale of one option position and the immediate purchase of a new option position. A "net trade" resulted in two commissions to CTI, 8% on the sale of the existing position and another 8% on the new purchase. CTI also engaged in "block trades" of customer positions without prior customer authorization. These "block trades" constituted unauthorized trades in the customers' accounts. CTI failed to disclose to its customers that the firm would refuse to return a customer's money unless the customer made a formal written demand and/or even threatened litigation.

The court found that Weber functioned as a roving sales manager at CTI and trained other brokers.

In view of the above, it is necessary and appropriate in the public interest to revoke the broker-dealer registration of CTI and to bar Weber from association with any broker or dealer.

IT IS ORDERED THAT, pursuant to Section 15(b) of the Securities Exchange Act of 1934, the registration of Currency Trading International, Inc., as a broker-dealer is revoked; and

IT IS FURTHER ORDERED THAT, pursuant to Section 15(b) of the Securities Exchange Act of 1934, Christian J. Weber is barred from association with any broker or dealer.

_________________________
James T. Kelly
Administrative Law Judge

 

http://www.sec.gov/litigation/admin/34-50050.htm


Modified: 07/21/2004