Yesterday the CFTC filed and settled charges against the New York City-based firms of Howard Winell, Winell Associates, Inc., and Maxie Partners GP, LLC. The three were accused of unauthorized trading and misappropriating funds while they were running a commodity futures and options pool.
Since 2005, the defendants solicited and pooled $20 million from 25 pool participants to trade via Maxie Partners LP. When, in 2007, one of the participants withdrew $7 million. Though the withdrawal should have come from segregated funds, the pool sustained significant losses right before the request could be honored, and the pool was badly in need of margins of $4 million. Winell transferred the $7 million back to fund, and lost $3.8 million of the participant’s money.
The CFTC claims this constitutes misappropriation and unauthorized trading. The defendants have been order to pay restitution of nearly $3.8 million, plus an additional $1.5 million in civil monetary penalty. They are also banned from trading and registering with the CFTC.
Read more about this CFTC enforcement action.