CFTC reaches settlement with CEO of ForexnPower
The Commodity Futures Trading Commission (CFTC) has reached a settlement with one of the defendants in a lawsuit dating back to 2015. This becomes clear from a proposed consent judgment filed by the regulator with the New York Eastern District Court on August 25, 2022.
The proposed judgment settles the matter regarding Tae Hung Kang (a/k/a “Kevin Kang”), the President and Chief Executive Officer (CEO) of Safety Capital Management Inc, doing business as ForexnPower.
On September 24, 2015, the CFTC filed its Complaint in this matter against defendants Safety Capital Management, Inc., (d/b/a “ForexnPower”) GNS Capital, Inc. (d/b/a/ “ForexnPower'”) , John H. Won, Sungmi Kang, and Tae Hung Kang (a/k/a “Kevin Kang”) seeking injunctive and other equitable relief, as well as the imposition of civil penalties.
Between October 2010 through December 2013 (the “Relevant Period”), Tae Hung Kang acted as an Associated Person (AP) of a Commodity Trading Advisor (CTA) by soliciting and accepting clients of Safety Capital d/b/a ForexnPower for managed off-exchange retail Forex trading accounts.
These Safety Capital forex trading clients did not have assets or net worth exceeding $10 million (or $5 million if the individual enters into the transaction to manage the risk associated with an asset owned or liability incurred, or reasonably likely to be owned or incurred, by the individual). Thus, Safety Capital’s forex trading clients were not Eligible Commercial Entities (“ECEs”) or Eligible Contract Participants (ECPs). Safety Capital had discretionary trading authority over these retail forex trading clients.
Safety Capital’s retail forex trading clients had managed accounts at a Futures Commission Merchant (FCM) and their off-exchange forex transactions were offered to or entered into with a person that is not an ECP or ECE on a leveraged or margined basis, and the transactions did not result in actual delivery within two days or otherwise create an enforceable obligation to make/take delivery in connection with the line of business.
During the Relevant Period, Kang also acted as an AP of a Commodity Pool Operator (“CPO”) by soliciting and accepting funds from participants for a commodity pool operated by Safety Capital d/b/a ForexnPower.
In soliciting retail forex customers and pool participants, Kang used the mail, email, telephone or other instrumentalities of interstate commerce.
As per the proposed settlement, Kang is permanently restrained, enjoined and prohibited from directly or indirectly trading on or subject to the rules of any registered entity (as that term is defined in Section 1a(40) of the Act, 7 U.S.C. § 1a(40)), as well as applying for registration or claiming exemption from registration with the Commission in any capacity, and engaging in any activity requiring such registration or exemption from registration with the Commission.
Kang also agrees to pay restitution in the amount of $835,058.
Tae Hung Kang is currently a defendant in a criminal action based on, in part, the misconduct that is at issue in this matter. On March 30, 2021, he pleaded guilty to one count of conspiracy to commit securities fraud in violation of 18 U.S.C. § 371.