CFTC v. CTI Group, LLC et al., Case No. 1:12-cv-03754-ALC (S.D.N.Y).  On May 25, 2012, the CFTC announced that it had charged CTI Group, LLC, Cooper Trading, Stephen Craig Symons, and James David Kline with fraudulent sales practices in connection with the sale of two automated trading systems, Boomer and Victory Trading Systems.  The complaint was filed under seal until recently when the U.S. District Court entered an emergency order freezing Defendants’ assets and prohibiting the destruction or alteration of books and records.  A hearing on the CFTC’s motion for a preliminary injunction has been set for June 21, 2012.

CTI Group and Cooper Trading, which were operated as a common enterprise by Symons and Kline, fraudulently solicited clients to subscribe to the Boomer and Victory Trading Systems.  CTI and Kline engaged in a pattern of making materially false statements and omitting material information in connection with the marketing of CTI’s Trading Systems to clients.  CTI’s misrepresentations and omissions concerned: 1) how long CTI had been in business; 2) CTI’s experience with Trading Systems; 3) the identities and professional experience of CTI’s personnel (who used false names when speaking with clients); 4) CTI’s track record; 5) Past profitability; and 6) Transactional costs.  CTI sold subscriptions to its Trading Systems for $5,000-6,000 to well over 1,000 clients, receiving at least $11.  CTI’s salespeople, including Kline, made false statements to clients about CTI’s purported money-back guarantee and misrepresented the risks associated with trading futures contracts using CTI’s systems.

Defendants are charged with violating the anti-fraud provisions of the Commodity Exchange Act.  The CFTC seeks disgorgement, restitution, civil monetary penalties, permanent trading and registration bans, and preliminary and permanent injunctions against further violations of the Commodity Exchange Act and CFTC regulations.