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Thursday, July 5, 2012
SELLING SYSTEMS TO TRADE IN FUTURES ENDS IN DEFAULT JUDGEMENT AGAINST COMPANIES AND INDIVIDUAL
FROM: COMMODITY FUTURES TRADING COMMISSION
CFTC Obtains Default Judgment against The Trade Tech Institute, Inc., Technology Trading International, Inc., and Robert Sorchini for Fraudulent Solicitation of Managed Commodity Trading Accounts and Obtains Consent Judgment against Richard Carter as Controlling Person of Both Companies
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that the U.S. District Court for the Central District of California entered an order of default judgment and permanent injunction against The Trade Tech Institute, Inc. (Trade Tech), Technology Trading International, Inc. (Tech Trading), and Robert Sorchini (Sorchini), all of Los Angeles, Calif. The same Court previously entered a consent order of permanent injunction against Richard Carter (Carter), also of Los Angeles, Calif.
The default order, entered on June 19, 2012, and the consent order, entered on February 29, 2012, both stem from a CFTC enforcement action filed jointly with the Commissioner of Corporations of the State of California on March 15, 2011, that charged defendants with fraudulently promoting and selling to the public several commodity trading systems pursuant to which customer managed accounts were traded (see CFTC News Release 6005-11, March 21, 2011).
The orders find that from at least 2007 until the CFTC complaint was filed in March 2011, Trade Tech, by and through Sorchini, Carter and other employees, fraudulently promoted and marketed a variety of systems to the public to be used for trading futures contracts and options on futures contracts in managed accounts. Trade Tech’s systems included Trade Tech Analytics, Paradigm, Optimum, Expeditor, MAC, Hybrid, Daytona and Pioneer. The orders also find that beginning in April 2010, Sorchini, Carter and others formed Tech Trading to continue their fraudulent promotion and selling of systems. The orders find that Carter and Sorchini were controlling persons of Trade Tech and Tech Trading.
The default order also finds that while selling these systems, Trade Tech, Tech Trading and Sorchini made fraudulent representations to prospective and existing clients about the systems’ purported past and potential future profitability and track records, failed to adequately warn clients of the risks inherent in trading futures and options, failed to disclose to clients the systems’ losing performance records in client managed accounts and made fraudulent performance-based guarantees. In addition, the default order and consent order find that Trade Tech published a misleading testimonial on its website and failed to inform clients or obtain clients’ consent when switching clients’ managed accounts between systems.
The court’s default order requires Trade Tech and Tech Trading to disgorge $2,910,245.10 and $423,140, respectively, of ill-gotten gains the companies received. The order imposes restitution on Trade Tech and Tech Trading of $2,386,970.38 and $38,847.99, respectively, and civil monetary penalties of $8,730,735.30 and $1,269,420, respectively. Additionally, the order requires Sorchini to disgorge $764,250.97 of ill-gotten gains he received from his fraudulent conduct, imposes joint and several liability on Sorchini for $2,251,766.50 of Trade Tech’s and Tech Trading’s restitution obligations, and a civil monetary penalty of $2,292,752.91.
The court’s consent order requires Carter to disgorge $992,352.93 of ill-gotten gains and imposes a civil monetary penalty of $496,176.46.
The orders permanently bar Trade Tech, Tech Trading, Sorchini and Carter from engaging in any commodity-related activity, including trading and registering or seeking exemption from CFTC registration, and from violating the anti-fraud provisions of the Commodity Exchange Act.