U.S. derivatives regulators have ordered US$4.7 million in fines and restitution against an unregistered commodities trading firm that targeted retail investors in Canada and the United States.
The U.S. Commodity Futures Trading Commission (CFTC) issued an order Monday filing, and settling charges, against two Miami-based companies, Pan American Metals of Miami, LLC and Pan American Metals of Miami Beach, Inc., and their owner and principal, William Hionas, for engaging “in illegal, fraudulent off-exchange financed transactions in precious metals with retail customers.”
The CFTC’s order finds that from July 2011 to April 2012, the Pan American Companies fraudulently solicited and accepted more than US$4.7 million from retail customers throughout the U.S. and Canada to “engage in illegal off-exchange financed transactions in gold, silver, platinum, and palladium, in which a retail customer purportedly purchases physical commodities and pays just a portion of the purchase price.”
It says that the Pan American companies falsely claimed to: sell and transfer ownership of physical metals to customers; provide loans to customers to purchase the physical metals; and, arrange for storage and store customers’ physical metals in independent depositories. In fact, it says, they did none of these things. It also says that the companies defrauded customers by misrepresenting, and failing to disclose material facts.
Ultimately, the regulator reports that 180 of the companies’ 189 customers lost money, with much of the US$3.2 million they lost going to pay commissions and fees to the companies.
Under the order, Hionas and the Pan American companies must jointly pay restitution of approximately US$3.2 million to defrauded customers, and a US$1.5 million civil monetary penalty. It also imposes permanent trading and registration bans against them, and permanently prohibits them from further violations of federal commodities law.