CFTC Charges New Yorker in Binary Option CPO Fraud

CFTC Charges New Yorker in Binary Option CPO Fraud

Recently, the CFTC filed an action against Kevin Scott Antonovich alleging from September 2015 through August 2016 he fraudulently solicited and received approximately $284,000 from at least 154 pool participants in connection with pooled investments in off-exchange binary options, using the funds for his personal use, and making false and misleading representations to pool participants. A binary option is a type of options contract in which the payout depends entirely on the outcome of a yes/no proposition and typically relates to whether the price of a particular asset will rise above or fall below a specified amount. Binary options have been the subject of many investigations and actions. 

According to the Complaint, Antonovich told pool participants that his trading for the pool would occur on a CFTC-registered exchange when, in fact, all trading occurred on offshore platforms.  As further alleged, Antonovich issued numerous updates to pool participants falsely claiming that his trading for the pool was profitable.  In addition, when pool participants sought payouts from the pool, Antonovich falsely claimed that funds were available to be paid out and fabricated trading account and bank documents to give pool participants the false impression that funds were available to satisfy not only return of principal funds, but also payment of purported profits.

Any registered or non-registered company  that receives a CFTC  investigative demand should consult competent counsel immediately to discuss the investigative process.

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Kennyhertz Perry advises clients on a wide range of commodities and derivatives regulatory matters.  Kennyhertz Perry has experience in all types of derivative transactions and design structures to meet clients’ specific trading, financial and/or credit needs.  The roots of the practice are in the commodities markets, where Kennyhertz Perry partner Braden Perry spent time as a Senior Trial Attorney with the Commodity Futures Trading Commission.  Our lawyers regularly advise our clients on compliance with the complex laws and regulations governing the securities and derivatives industries, including the Commodity Futures Modernization Act of 2000, the Commodity Exchange Act, the Gramm-Leach-Bliley Act, the Securities Acts of 1933 and 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the SEC and CFTC regulations, the rules of the various derivatives exchanges and clearinghouses and other industry self-regulatory organizations and the “Blue Sky” state securities laws. Keeping abreast of regulatory developments is imperative, and enables our lawyers to guide clients on comment-making about proposed legislation and regulation, provide ongoing operational and compliance counseling, and offer advice on appropriate modifications of transaction structure and documentation.

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