CFTC v. National Equity Holdings, Inc., et al., Case No. SACV 11-1718-JVS (C.D. Cal.). On April 15, 2013, the CFTC announced it settled with Defendants Robert Cannone and National Equity Holdings, Inc. The CFTC alleged that Cannone, by and through National Equity, solicited more than $1.4 million to trade commodity futures contracts through a pool. According to the CFTC, Cannone and National Equity falsely told investors that there was a successful and experienced trader for the pool, they misrepresented the potential of profits and the risks associated with trading commodity futures, they did not tell investors that they were not registered with the CFTC to operate a pool, and they did not tell investors how the funds would be used. Cannone and National Equity hid the fraud and trading losses from investors by issuing false account statements that showed profits. Without admitting or denying the charges, Cannone and National Equity Holdings consented to entry of an order requiring them to pay restitution to investors, imposing $2.8 million in civil monetary penalties on National Equity and $800,000 on Cannone, imposing a permanent trading ban, and enjoining them from future violations of the Commodity Exchange Act. In a related criminal action, Cannone pleaded guilty and was sentenced to 27 months in prison and ordered to pay $1,059,096 in restitution.
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