L.A. Trader Settles CFTC Fraud Charges
Settling charges that his company fraudulently solicited thousands of customers from 1998 through 2001, a Los Angeles commodities trader has agreed to repay investors $810,000, pay a $110,000 fine to the government, and be banned from the industry, regulators said Wednesday.
A Commodity Futures Trading Commission complaint contended Madison Financial Group President Richard A. Cohen told employees to “make up a story” when soliciting customers by phone.
Using high-pressure tactics, the employees claimed Madison clients were making large sums trading commodity options when in fact 97% of them lost money, the CFTC said. The CFTC said net losses in Madison accounts totaled $17 million while Madison made $9 million in fees.
Another principal in Madison, Ronald G. Scott of Beverly Hills, faces similar charges; his lawyer, Eric O. Ibisi of Los Angeles, declined to comment. Jack Barrett, head of the CFTC’s Los Angeles office, said an administrative law judge is expected to schedule a hearing this fall on the charges against Scott.
The CFTC banned Cohen and his Los Angeles-based firm, which is no longer in business, from trading commodities or acting as advisors to investors. He was given 10 years to repay investors, then pay his fine. Cohen’s attorney couldn’t be reached for comment.
