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Portfolio > Mutual Funds > Equity Funds

'Astonishing' Claims, Negative Numbers in New Jersey

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CAMDEN, N.J. (–A federal district court in New Jersey entered a restraining order against a New Jersey commodity pool operator, its principal, its trading adviser and its attorney, freezing their assets and preventing the destruction or alteration of their books or records.

Judge Robert B. Kugler acted in response to a complaint by the Commodity Futures Trading Commission, April 1.

The defendants are: Equity Financial Group LLC, an unregistered CPO; Tech Traders Inc., its commodity trading adviser; Vincent J. Firth, the president and sole shareholder of Equity Financial (all of Medford, N.J.); and Robert W. Shirmer, Leesport, Pa., Equity Financial’s counsel. The complaint charges Equity Financial and Mr. Firth with fraud. It also charges Tech Traders with illegally trading customer funds in its own name, and Mr. Shirmer (who has been a member of the bar in Massachusetts since 1973) with aiding and abetting Equity’s failure to register and Tech Trader’s illegal trading of customer funds.

The investments solicited by defendants went into Shasta Capital Associates LLC, a Medford, N.J.-based hedge fund, the complaint states: “Equity and Firth falsely touted ‘astonishing’ performance of the Shasta commodity pool, claiming that the pool has earned trading profits of approximately 100% per annum [over the last three years] when it fact it appears that the trading accounts … have actually suffered large losses that have not been disclosed to the pool participants.”

The complaint also makes reference to the web site, which “has touted Shasta as a top performing hedge fund and featured Shasta as the hedge fund of the week during the week of March 14, 2004.”

The defendants could not be reached for comment.

The CFTC is seeking preliminary and permanent injunctive relief, refunds to investors, the repayment of ill-gotten gains and monetary penalties. Judge Kugler scheduled a status hearing for April 7, 2 p.m. ET.

Other CFTC News

The CFTC Tuesday proposed amendments to its rules affecting foreign futures and options brokers, i.e., non-U.S. firms that engage in transactions on non-U.S. markets on behalf of investors located in the United States.

The amendment would clarify rule 30.4(a) by stating that foreign futures and options brokers are not required to register as futures commission merchants in the United States or to seek exemption from registration under 30.10, under any of three circumstances: if they only carry customer omnibus accounts for U.S. futures commission merchants (that is, accounts in the name of the U.S. futures commission merchants that include positions of several customers), or if they only carry accounts of their U.S. affiliates, or if they only carry accounts that are classified as “proprietary” to a U.S. futures commission merchant.

The CFTC has published this amendment in the Federal Register for a 60-day comment period.

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