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CFTC News: Chairman Gensler Steps Down, New Co-COOs Are Appointed, & the Agency Revokes Commodity Trading Adviser’s Registration Over Fraud

Gary Gensler has stepped down as the chairman of the Commodity Futures Trading Commission. Timothy G. Massad, an official from the US Treasury, is his successor.

A former Goldman Sachs (GS) trader and later also a Treasury Department official, Gensler became, according to Reuters, the regulator that Wall Street became most afraid of following the economic crisis. His tough reforms have gained him numerous admirers, as well as critics who believe that he hurt the markets.

During his 5-year tenure as head of the CFTC, the Commission finished 70% of the rules it was supposed to write—way more than any other US regulator. He also took the most stringent stance regarding rules to get swaps trading onto exchange-like platforms and just recently he brought through a plan mandating that foreign banks follow CFTC rules when dealing with US clients even though foreign regulators wanted otherwise.

In other agency news, the CFTC has revoked Prestige Capital Advisors, LLC’s registration. The agency said the commodity trading advisor was statutorily disqualified for registering in the wake of a federal district court ruling that mandated the firm pay more than $11 million in sanctions for Commodity Exchange Act violations.

It was a year ago that the U.S. District Court for the Western District of North Carolina submitted an order of default judgment and permanent injunction against Prestige, D2W Capital Management, and Toby Hunter. The court determined that Prestige fraudulently solicited and accepted over $4.7 million from different pool participants for investments in commodity pools that traded futures and commodities contracts. Prestige then published bogus trading returns on its web site, misappropriated client funds, and made false account statements. The court said Prestige had to pay $6.9 million of a civil monetary penalty and over $4.1 million in restitution.

More CFTC Appointments
Scott Reinhart and Joseph Cisewski, two CFTC employees, have been promoted at the agency to co-chief operating officers and co-chiefs of staff. CFTC Chair Mark P. Wetjen made the announcement.

Cisewski has been special counsel and policy adviser to Wetjen since the latter was confirmed to the Commission in 2011. He also served in the General Accounting Office’s GAO Division of Financial Markets and Community Investment. Reinhart also has served in the same position to Wetjen. Previously, he was in-house counsel to Lehman Brothers’ structured credit products desk and gave the bank advice during its bankruptcy as lead counsel regarding the commodity derivatives book.

Commissioner Wetjen said the two men have advised him on over 60 final rules, interpretations, and orders in the last two years. He believes that their work has helped bring greater transparency to the swaps marketplace and created a safer, more solid derivatives market structure.

Please contact The SSEK Partners Group if you suspect that you have been the victim of securities fraud.

Gary Gensler defends record as he leaves CFTC, FT.com, December 30, 2013

See the CFTC Action against Prestige Capital (PDF)

CFTC Acting Chairman Mark Wetjen Names Joseph Cisewski and Scott Reinhart as Co-Chiefs of Staff and Co-Chief Operating Officers, CFTC, January 3, 2014

More Blog Posts:
CFTC Securities Headlines: Goldman Sachs Fined For Inadequate Broker Supervision in $118M Fraud, Firms Named in Precious Metal Scam, & Defendants to Pay $1.8M Over Off-Exchange Foreign Currency Scheme, December 14, 2012

SIFMA, ISDA, and IIB Sue CFTC Over Alleged Unlawful Rulemaking Regarding Cross-Border Rules, Swap Regulations, Institutional Investor Securities Blog, December 4, 2013

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