Binary Options fraud leads to $13.8M fine for Peter Szatmari
U.S. derivatives markets regulator Commodity Futures Trading Commission (CFTC) has announced that the U.S. District Court for the District of Hawaii entered an order of default judgment on September 14, 2020 finding that Peter Szatmari, formerly of Hawaii, fraudulently solicited U.S. residents to open binary options trading accounts.
Szatmari is required to pay more than $13.8 million in connection with the fraud.
The default judgment follows Judge Derrick K. Watson’s entry of an order on August 13, 2020 adopting the findings and recommendations Magistrate Judge Kenneth J. Mansfield issued on July 28, 2020. Szatmari is required to pay approximately $6.25 million in restitution to defrauded customers, $1.9 million in disgorgement, and a civil monetary penalty of $5.7 million. Additionally, Szatmari is permanently enjoined from engaging in conduct that violates the Commodity Exchange Act, registering with the CFTC, and trading in any CFTC-regulated markets.
The order resolves a CFTC enforcement case filed on October 7, 2019, which charged that Szatmari and a business partner created and disseminated fraudulent solicitations that led approximately 25,000 customers to open and fund trading accounts that generated $3.8 million in fees for Szatmari and his partner, while customers lost most or all of their funds.
According to the CFTC complaint and findings, Szatmari specialized in “affiliate marketing,” a form of performance-based marketing that promotes third-party products or services, such as binary options trading, and is typically conducted via solicitations that the affiliate marketer emails to recipients and/or posts on the internet.
As charged and found, Szatmari and his partner fraudulently solicited customers into opening and funding binary option accounts on websites operated by unregistered, off-exchange brokers while pitching free access to automated trading software that purported to generate significant profits with little to no risk of loss. Their marketing campaigns featured actors pretending to be actual owners or users of the trading software, and depicted fictitious trading results as real. The court further found that Szatmari knew that the solicitations were false and misleading, that the software did not work as claimed, and that customers were unlikely to make a profit.
The CFTC cautions that orders requiring repayment of funds to victims may not always result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC said it will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
The CFTC noted that it acknowledges and thanks the Securities and Exchange Commission (SEC) for its assistance in this matter.