CFTC ALJ ENTERS CEASE AND DESIST ORDER AND 10-YEAR TRADING BAN AGAINST SHAHROKH NIKKHAH FOR TRADE PRACTICE VIOLATIONS

WASHINGTON—In an Initial Decision issued on November 5, 1998, Commodity Futures Trading Commission (CFTC) Administrative Law Judge (ALJ) George H. Painter found that during the period of January 1990 through March 1991, Shahrokh Nikkhah fraudulently allocated executed trades among accounts he controlled, falsely assured at least one customer that there would be no additional losses in the client's account, and wrongly transferred executed trades from one customer's account to that of another customer (see CFTC News Release #3852-95, June 19, 1995).

Nikkhah was formerly registered with the CFTC as both an associated person of a futures commission merchant and a commodity trading advisor.

The ALJ also found that Nikkhah was liable for various record preparation and record keeping violations, including failing to prepare order tickets until after trades were executed and destruction of records.

ALJ Painter concluded that Nikkhah engaged in a scheme in which he allocated winning trades to some accounts and losing trades to others. To effectuate his scheme, Nikkhah did not provide floor brokers with account identifications when entering orders. Rather, according to the Initial Decision, after allocating the executed trades Nikkhah would provide his sales assistants sheets of paper on which Nikkhah had listed the trades and the accounts to which they were to be allocated. The sales assistants then prepared order tickets from the information appearing on the sheets.

The ALJ ordered Nikkhah to cease and desist from further violations and, citing the seriousness of the violations, prohibited Nikkhah from trading on any designated futures exchange for 10 years.

The respondent has 15 days from the date of service of the Initial Decision to file an appeal with the Commission. If the decision is appealed, or if the Commission chooses to review the decision on its own initiative, the decision does not become final and the sanctions do not take effect pending the outcome of the Commission's review.