CFTC obtains Court order against Long Leaf Trading
The Illinois Northern District Court has granted in part the CFTC’s motion for supplemental relief in its case targeting Long Leaf Trading Group, James Donelson and Jeremy Ruth.
On December 6, 2022, the Honorable Thomas M. Durkin signed an order permanently enjoining the defendants from (1) trading commodity interests, directly or indirectly, for themselves or on behalf of others; (2) applying for registration or acting in any capacity that requires registration; and (3) violating the Act or any Regulations.
Donelson is jointly and severally liable with Long Leaf for a civil monetary penalty of $617,706.50. Long Leaf is further ordered to pay a civil monetary penalty of $1,387,790.50. Ruth is ordered to pay a civil monetary penalty of $150,770.50.
The civil monetary penalties are immediately due and owing, but only after the defendants’ restitution and disgorgement obligations have been satisfied should any payments be applied to satisfy any portion of the civil monetary penalties.
The CFTC alleges that Long Leaf was a boiler room that skirted registration and regulatory requirements and cheated and defrauded substantially all of its clients over its approximately five-year existence. Long Leaf did not register as a CTA and it did not provide customers with the required disclosure document.
In addition to its registration and regulatory violations, Long Leaf defrauded its customers through a scheme that spanned the ownership of both Defendant Timothy Evans (2015–November 2017) and Donelson (December 2017–December 2019). The fraud generally took the form of misrepresentations about the company’s performance, the qualifications of its management, and omissions of track record information— all of which are items that courts have long held are material as a matter of law in this context.
Long Leaf’s misrepresentations and omissions were memorialized in pitch scripts and other solicitation materials that were used by Long Leaf’s broker staff as they sat each day cold-calling hundreds of potential customers.
Customers who participated in the trading program sustained losses totaling $5,767,145.