June 13, 2012

CFTC Settles Charges against Defendant Robert Mihailovich, Jr. for Making False Statements to the CFTC

Federal court in Texas orders Mihailovich, Jr. to pay $40,000 fine and bans him from registering with the CFTC for 10 years and from trading for five years

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent order against defendant Robert Mihailovich, Jr. of Rockwall, Texas, requiring him to pay a $40,000 civil monetary penalty.  The order, entered in the U.S. District Court for the Northern District of Texas by Judge Jane J. Boyle, also bans him from seeking registration with the CFTC for 10 years, and from engaging in certain commodity-related activities, including trading, for a five-year period.

The consent order arises out of a CFTC complaint filed on July 27, 2010, against Mihailovich, Jr., his father, Robert Mihailovich, Sr., and Growth Capital Management, LLC (GCM).  The CFTC’s complaint charged Mihailovich, Sr. and GCM with fraudulent solicitation in connection with trading commodity futures contracts and leveraged foreign currency (forex) transactions.  The complaint also charged Mihailovich, Jr. with failing to disclose in CFTC registration filings that his father, Mihailovich, Sr., a convicted felon, was a controlling principal of GCM, a CFTC registrant (see CFTC press release 5863-10, July 28, 2010).

The court’s consent order finds that Mihailovich, Jr., at the time of GCM’s initial registration in September 2008, failed to disclose the involvement of his father, Mihailovich, Sr., with GCM.  Further, despite being advised by the National Futures Association (NFA), in early 2009, that Mihailovich, Sr. was using GCM to manage customer accounts, Mihailovich, Jr. continued to omit Mihailovich, Sr.’s name from required regulatory filings for GCM, the order finds.  Mihailovich, Jr. knowingly omitted Mihailovich, Sr.’s involvement with GCM due to Mihailovich, Sr.’s previous incarceration for wire fraud, according to the order.

In the continuing litigation, the CFTC seeks entry of proposed sanctions against GCM and Mihailovich, Sr. in connection with default judgments entered against the defendants on March 15, 2011, and November 22, 2011, respectively.

The CFTC thanks the U.S. Attorney’s Office for the Northern District of Texas, the Securities and Exchange Commission’s Fort Worth Regional Office, and the NFA for their assistance.

CFTC Division of Enforcement staff members responsible for this case are Alison B. Wilson, Boaz Green, Stephen T. Tsai, Maura M. Viehmeyer, Philip Tumminio, Michelle Bougas, Anne Termine, Gretchen L. Lowe, and Vincent A. McGonagle.

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Last Updated: June 13, 2012