CFTC seeks Court order of injunction, asset freeze against My Forex Funds
The Commodity Futures Trading Commission (CFTC) has moved the Court for preliminary injunction in its case against My Forex Funds.
The relevant documents were submitted on November 9, 2023 in the New Jersey District Court.
The CFTC seeks an order continuing the Court’s Statutory Restraining Order (SRO), as well as order enjoining future violations of the Act and Commission Regulations.
Let’s recall that, on August 28, 2023, the Commodity Futures Trading Commission filed a Complaint for Injunctive Relief, Civil Monetary Penalties, and Other Equitable Relief against Traders Global Group Inc., a New Jersey corporation, d/b/a “My Forex Funds”, Traders Global Group Inc., a Canadian business organization, and Murtuza Kazmi. The CFTC accused the defendants of violations of the Commodity Exchange Act (“Act”), 7 U.S.C §§ 1-26, and accompanying Commission Regulations, 17 C.F.R. pts. 1-190 (2022) .
The CFTC seeks that the Court enters an order enjoining the defendants, and any person acting in active concert or participation with the defendants, from engaging in the charged misconduct, i.e., soliciting customers for participation in the My Forex Funds programs, or acting as counterparty to customers in retail forex or retail commodity transactions as Traders Global has done with respect to customers trading “live accounts.”
A preliminary injunction is appropriate where the CFTC has made a prima facie case that the defendants have engaged in fraud, particularly with respect to retail customers. A preliminary injunction is also appropriate in cases where no fraud is alleged, but the defendant is engaged in an “illegal business” without required registration.
The CFTC notes that the sheer scope of the defendants’ unregistered RFED, and off-exchange retail commodity trading, business compels the conclusion that preliminary injunctive relief is required.
The asset freeze and requirement to maintain books and records and to provide such records promptly to the CFTC and the permanent receiver, subject to any valid assertion of privilege, under the current statutory restraining order should continue as modified by the Court’s subsequent orders. The asset freeze is justified by the need to preserve funds for disgorgement or restitution, and
to prevent transfer or dissipation of assets by the defendants, two of whom (Kazmi and Traders Global Canada) reside outside of the United States.
The previously-appointed temporary receiver is set to be discharged, and a new permanent receiver is to be appointed. The permanent receiver will be John Carney of Baker & Hostetler LLP. The temporary receiver will work to ensure an orderly transaction of the estate to the permanent receiver.
The duties of the permanent receiver shall at this time be limited to: (a) maintaining and managing communications through the receivership website, which was posted in place of the former My Forex Funds website; and (b) maintaining custody of the funds in the current receivership account. This shall be without prejudice to the Parties to seek enlargement or reduction of the scope of the permanent receiver’s duties.
The CFTC notes that it has demonstrated a likelihood of future violations by the defendants that justifies preliminary injunctive relief. Defendants’ conduct was ongoing and systemic. Courts hold that “the likelihood of future violations may be inferred from past infractions based upon consideration of the totality of the circumstances to determine if the past infraction was an isolated occurrence as opposed to an indication of a systematic and continuous pattern of wrongdoing.”
During the almost two-year Relevant Period, the defendants continuously engaged in fraud in connection with retail forex and retail commodity transactions through Traders Global, acted as an RFED without registration, and executed off-exchange retail commodity transactions. Traders Global successfully solicited at least 135,000 customers, and acted as counterparty to at least 24,000 customers in retail forex or retail commodity transactions. In the absence of preliminary injunctive relief, Defendants are likely to resume their conduct.