A binary options trading firm with offices in the U.S. and the Netherlands misappropriated investors’ funds, U.S. derivatives regulators allege.
The U.S. Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Berkley Capital Management, LLC, and two options traders (a U.S. resident, William Thomas Caniff, and Netherlands resident Arie Bos), alleging that they fraudulently solicited more than $4.8 million (all figures in U.S. dollars) from investors to trade binary options on the North American Derivatives Exchange (NADEX).
The CFTC alleges that only $85,000 was sent to trade on NADEX, whereas approximately $2.3 million was misappropriated, “leaving a shortfall in excess of $2.5 million owing to participants.”
The allegations have not been proven.
The CFTC is seeking restitution for investors, disgorgement of ill-gotten gains and civil monetary penalties, along with permanent bans from registration and trading.
On May 1, a judge in the Northern District of Illinois issued an order freezing the assets of the firm, Caniff and Bos, and requiring their books and records to be preserved.
A hearing on a CFTC motion for a preliminary injunction has been set for May 22.
“As alleged here, the defendants perpetrated their fraud by lying to the exchange, lying to customers and pocketing millions of dollars in customer funds instead of trading them for customers as promised,” said James McDonald, director of enforcement at the CFTC.