March 28, 2019
Federal Court Orders Futures Trader to Pay a Penalty of More Than $1 Million for Fraud
Washington, DC – The Commodity Futures Trading Commission (CFTC) announced today that a federal court in Illinois ordered William H. Powderly IV (Powderly) of New Hope, Pennsylvania, to pay a civil monetary penalty of $1,083,138 for fraudulently soliciting customers and distributing false account statements. The Order stems from a CFTC Complaint filed on May 1, 2017. [See CFTC Press Release 7553-17]
Judge Marvin Aspen of the Northern District of Illinois issued the Order on March 5, 2019, imposing the penalty requested by the CFTC while rejecting Powderly’s request that the Court decline to impose a penalty.
The Court previously entered a Consent Order on September 11, 2018, which found that, from at least January 2016 through October 2016, Powderly violated the Commodity Exchange Act (CEA) and CFTC Regulations by fraudulently soliciting customers and prospective customers for Powderly to trade commodity futures on their behalf. More specifically, the Consent Order found that Powderly falsely represented to customers and prospective customers that he and a university professor had developed a commodity futures trading program that generated exceptional hypothetical trading results and that “beta” testing of this system generated consistent gains without a single day of loss. The Consent Order further found that Powderly had accepted $1,278,000 from seven customers and sustained net trading losses in excess of $1 million over a 10-month period. The Consent Order found that Powderly nonetheless created and distributed false account statements which reported profits, and failed to tell prospective customers that the actual commodity trading he conducted for his account was consistently unprofitable.
The Consent Order required Powderly to pay $1,069,300 in restitution to defrauded customers and imposed permanent trading and registration bans as well as prohibiting Powderly from further violations of the CEA and CFTC Regulations.
The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
CFTC Division of Enforcement staff members responsible for this case are Joseph Patrick, Lindsey Evans, Scott Williamson and former staff members Diane M. Romaniuk and Rosemary Hollinger.