Alabama man fined $755,000 for Binary Options fraud
US derivatives market regulator Commodity Futures Trading Commission (CFTC) has announced that the U.S. District Court for the Northern District of Alabama issued an order granting a permanent injunction against Aaron B. Butler, a former resident of Muscle Shoals, Alabama, and requiring him to pay a combined $755,000 in restitution and civil monetary penalty for violations of the Commodity Exchange Act and CFTC regulations.
The order also imposes permanent trading and registration bans on Butler, among other injunctive relief.
The court’s order stems from a CFTC complaint filed on November 4, 2019, charging Butler and his company, Negus Capital Incorporated (NCI), also of Muscle Shoals, with fraudulent solicitation, misappropriation, and registration violations in connection with binary options trading.
The order finds that from March 16, 2017, through February 21, 2018, Butler, in his individual capacity and on behalf of NCI, unlawfully solicited and accepted $305,000 from more than 70 customers to trade binary options contracts, defrauded those customers, and operated as an unregistered commodity trading advisor.
In particular, the order finds that Butler misrepresented his treatment of customers’ deposits totaling between $500 and $5,000, claiming he would pool those funds into a single trading account, and that he, acting as the trader for NCI, would use them to trade binary options on the customers’ behalf. The order also finds that Butler misled customers that he would deposit each customer payment of $5,000 or more into separate customer trading accounts, and Butler would, for a fee, manage and trade binary options on behalf of customers. Rather than trade customer funds as promised, Butler instead misappropriated most, if not all, funds for his own personal benefit, including spending tens of thousands of dollars on jewelry, purchases at an electronics store, and retail gift cards.
In its continuing litigation against NCI, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, as well as a permanent injunction against future violations of the Commodity Exchange Act and CFTC regulations.