CFTC seeks judgment against former Long Leaf Trading Group associate
The United States Commodity Futures Trading Commission (CFTC) is pushing for a summary judgment against Jeremy Ruth, a former associate of Long Leaf Trading Group Inc.
Let’s recall that, in June 2020, the CFTC launched an action against Long Leaf, its principals James A. Donelson and Timothy M. Evans, and former Long Leaf associated persons Jeremy S. Ruth of Austin, Texas, and Andrew D. Nelson. The defendants were charged with defrauding customers in connection with options on futures transactions. Some of the defendants were also charged with registration and disclosure violations.
Now, the CFTC is taking another step in its action. On November 4, 2021, the Commission filed a motion for summary judgment on its claims against Defendant Jeremy Ruth, which are for (1) options fraud and (2) aiding and abetting his former employer, Long Leaf, in its commodity trading advisor (CTA) fraud.
From April 2015 through August 2017, Ruth worked for Long Leaf soliciting prospective customers for participation in an options trading program. Ruth made numerous false and misleading statements to prospective customers touting the benefits of Long Leaf’s trading program, including that the program conferred a “statistical advantage,” that Long Leaf “wouldn’t be trading for customers if they weren’t making a profit,” and that customers could expect annual returns of 6-12% or more.
During the period Ruth worked for Long Leaf, customers who participated in the program lost more than $3.1 million. Substantially all customers lost money participating in Long Leaf’s trading program.
Ruth knew that Long Leaf’s customers lost money participating in the trading program. Ruth admits that he received and reviewed daily account statements for his customers, including for his own grandfather’s account. These statements reflected losses.
Ruth admits as well that he received frequent complaints from customers about losses in their accounts. Moreover, Ruth tracked losses from recommended trades, and emailed his analyses to other Long Leaf personnel.
Ruth failed to disclose to customers or prospective customers that almost all Long Leaf customers lost money as a result of the trading program. His omission was a deliberate one, and consistent with Long Leaf’s policy of never disclosing its dismal trading results. Ruth admits that he followed the policy. Ruth even counseled other Long Leaf employees on how to get around requests for a “track record” by prospective customers.
In light of the CFTC’s overwhelming, objective, and undisputed evidence, no rational trier of fact could fail to find that Ruth engaged in fraud, in violation of the Commodity Exchange Act and CFTC Regulations. Accordingly, the CFTC requests that the Court enter summary judgment in its favor against Ruth on Counts I (options fraud) and II (aiding and abetting CTA fraud) of the complaint.
The undisputed facts reflect that Ruth was paid a total of $301,541.39 for his work at Long Leaf. Ruth’s pay was comprised almost entirely of money that customers lost to commissions. According to the CFTC, the sum should be repaid to customers in the form of restitution.