November 4, 2019
CFTC Charges Alabama Resident and His Company with Binary Options Fraud
Washington, DC — The U.S. Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Northern District of Alabama charging Aaron B. Butler and his company, Negus Capital Incorporated (NCI), both of Alabama, with fraudulent solicitation, misappropriation, and registration violations in connection with binary options trading.
The CFTC’s complaint alleges that from March 16, 2017, through February 21, 2018, Butler and NCI unlawfully solicited and accepted at least $300,000 from more than 65 members of the public to trade binary options contracts on the North American Derivatives Exchange (Nadex), defrauded those customers, and operated as an unregistered commodity pool operator (CPO) and an unregistered commodity trading advisor (CTA).
As alleged, Butler and NCI misrepresented that for customer deposits between $500 and $5,000, they would pool those customers’ funds into a single trading account at Nadex, and Butler, acting as the trader for NCI, would use those funds to trade binary options on the customers’ behalf. The complaint also alleges that Butler and NCI misrepresented they would deposit each customer payment of $5,000 or more into separate customer trading accounts at Nadex, and Butler would, for a fee, manage and trade binary options on behalf of customers. Rather than trade customer funds as promised, Butler and NCI instead misappropriated most, if not all, funds for Butler’s personal benefit, including spending tens of thousands of dollars on jewelry, purchases at Apple stores, and Toys “R” Us gift cards.
In its continuing litigation against Butler and NCI, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction from future violations of the Commodity Exchange Act and CFTC regulations.
The CFTC thanks the Alabama Securities Commission for their assistance in this matter.
The Division of Enforcement staff members responsible for this case are James Deacon, Kevin Samuel, and Rick Glaser.