The United States Commodity Futures Trading Commission (CFTC) has secured a permission from the Court to issue subpoenas to UK-based Forex firm ATC Brokers as the regulator seeks to gather information related to a lawsuit targeting $75 million Ponzi scheme Oasis International.
Earlier this week, Magistrate Judge Sean P. Flynn of the Florida Middle District Court issued an order granting the CFTCs request for the subpoenas.
Let‘s recall that, on April 15, 2019, the CFTC filed an emergency ex parte action to halt a $75 million Ponzi scheme that allegedly violated anti-fraud and registration provisions of the Commodity Exchange Act, 7 U.S.C. § 1 et seq. (2018), and the Commission’s Regulations. That same day, the Court entered a statutory restraining order, which among other things, prohibited the withdrawal, transfer, removal, dissipation, and disposal of assets by the defendants, and appointed a receiver, Burton W. Wiand.
The Oasis Ponzi scheme involved solicitation and misappropriation of money from over 700 U.S. residents for pooled investments in retail FX contracts. As alleged, pool funds were transferred to a forex trading account in the United Kingdom.
On March 31, 2021, the Receiver filed a motion to approve his engagement of contingency counsel for the purpose of further investigating and pursuing claims against ATC Brokers, Ltd. (“ATC UK”) and related individuals and entities.
ATC UK is a United Kingdom “brokerage firm that serves the forex industry from its headquarters in London and operations in the U.S.” In his ATC Motion, the Receiver alleges, among other things, facts that indicate ATC UK may have been complicit in the fraud perpetrated by Oasis and its principals. On April 20, the Court granted the Receivers ATC Motion.
ATC UK is affiliated with ATC Brokers (“ATC US”), based in Glendale, California. ATC US is registered as an introducing broker with the CFTC and listed as a forex firm and member with the National Futures Association (NFA), a self-regulatory organization designated by the CFTC as a registered futures association.
David Manoukian is the Chief Executive Officer of ATC US and is registered as an associated person of ATC US with the CFTC and listed as a principal and forex associated person of ATC US with NFA. As CFTC registrants, the CFTC has regulatory responsibilities associated with ATC US and Manoukian—neither of whom are currently defendants in this action.
The CFTC sought to conduct third-party discovery related to the issues raised by the Receivers ATC Motion.
The CFTC asked the Court for an order granting limited relief from the stay of this litigation such that the CFTC may issue Federal Rule of Civil Procedure 45 subpoenas to the ATC Entities, as well as to any other non-party entities and individuals the CFTC believes likely to possess relevant information related to claims and possible defenses involving the ATC Entities.
The Court has agreed with the CFTC and the regulator may now proceed with issuing the subpoenas.
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