Forex broker fined for off-shore fraud

The CFTC has simultaneously filed and settled charges against Alan A. Grant and his firm, Francis Grant Investments Inc, in connection with foreign exchange (“forex”) fraud. According to the CFTC, the defendants failed to notify customers that the forex pool in which they participated had been frozen by the regulatory actions of a foreign agency. Then, Grant and FGI sent customers false account statements reporting profitable trading in these frozen accounts.

The CFC order finds that, from April 2007 to August 2008, Grant and his firm solicited customers to invest in a commodity pool operated by a third party based in Turks and Caicos. The pool ostensibly carried out leveraged over-the-counter forex trading. Grant was able to solicit millions of dollars from hundreds of customers to invest in the commodity pool.

The order states that in early 2008, the defendants learned of a regulatory action taken against this off-shore pool by a foreign agency. Because of this action, trading in the pool had ceased. Though obliged to disclose this to their customers, Grant and his forex brokerage began issuing customer account statements reflecting profitable investments, even though the frozen funds could not grow. Furthermore, the defendants solicited and accepted new customers to trade forex in the now-frozen off-shore pool. From June to August of that year, Grant and FGI solicited about $155,000 from 18 customers.

The CFTC order mandates that Grant and FGI pay, jointly and severally, $500,000 in civil monetary penalty, and to cease and desist from further fraudulent activity. The order also imposes a trading ban permanently preventing the defendants from engaging in commodity-related activities, including trading, solicitation, and registration.

Read more about this CFTC enforcement action.
Creative Commons License photo credit: cmakin

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