In a recent development, the Commodity Futures Trading Commission (CFTC) has taken legal action against Coby Young and his firm, Young Emerging Strategies LLC, both based in Illinois. The CFTC filed a complaint in the U.S. District Court for the Northern District of Illinois, alleging various violations related to fraudulent retail forex commodity pool operations. This article delves into the details of the case as per the CFTC's official release, shedding light on the charges and the implications for the defendants.
The Allegations
According to the CFTC's complaint, which covers a period starting from August 2019 and continuing to the present day, Coby Young and his firm engaged in deceptive practices related to leveraged, margined, or financed retail foreign currency transactions, commonly known as retail forex trading. The allegations include fraud, specifically in connection with the operation of a commodity pool, registration violations, disclosure and recordkeeping violations, and commingling pool property.
The Modus Operandi
The defendants allegedly lured individuals through various means, including a website, social media channels, and in-person interactions, encouraging them to participate in retail forex trading classes. Subsequently, they approached some of these participants, inviting them to join a retail forex trading pool managed by Young Emerging Strategies LLC. Promising substantial returns, including the doubling of investments, the defendants successfully garnered approximately $300,000 from pool participants.
However, the complaint asserts that instead of using the funds as promised, Young and his firm misappropriated a significant portion of the funds for personal expenses, cash withdrawals, and payments to other pool participants. Additionally, the defendants failed to register with the CFTC, neglected to provide essential disclosures to pool participants, and did not maintain the required records, further compounding their legal troubles.
Legal Consequences
The CFTC's complaint seeks various forms of relief, including:
Restitution to pool participants who were financially harmed by the fraudulent scheme.
Disgorgement of ill-gotten gains, aiming to recover unlawfully obtained profits.
Imposition of civil monetary penalties to hold the defendants accountable for their actions.
Permanent trading and registration bans to prevent future misconduct.
A permanent injunction prohibiting the defendants from violating the Commodity Exchange Act (CEA) and CFTC regulations.
Collaboration with Law Enforcement
The CFTC acknowledges the support of the Federal Bureau of Investigation and the U.S. Attorney's Office for the Northern District of Illinois in this case. The cooperation between regulatory bodies and law enforcement agencies is crucial in ensuring the protection of investors and maintaining the integrity of financial markets.
CFTC's Forex Fraud and Commodity Pool Advisories
To prevent falling victim to fraudulent schemes like the one alleged in this case, the CFTC provides valuable resources, including Fraud Advisories and Articles that educate the public about recognizing warning signs of fraud. These resources, such as the Foreign Currency (Forex) Trading Fraud Advisory and the Commodity Pool Fraud Advisory, offer information on how individuals can identify, avoid, and report scams.
Additionally, the CFTC advises the public to verify a company's registration with the CFTC before committing funds. Unregistered entities should raise red flags, prompting potential investors to exercise caution. Information on a company's registration status can be verified using NFA BASIC.
Reporting Suspicious Activities
The CFTC encourages customers and the general public to report any suspicious activities or information related to potential violations of commodity trading laws to the Division of Enforcement. This can be done through a toll-free hotline at 866-FON-CFTC (866-366-2382), filing a tip or complaint online, or reaching out to the Whistleblower Office. Whistleblowers may be eligible to receive a portion of the monetary sanctions collected from violators of the CEA through the CFTC Customer Protection Fund.
Conclusion
The CFTC's legal action against Coby Young and Young Emerging Strategies LLC serves as a reminder of the agency's commitment to safeguarding the interests of investors and maintaining the integrity of financial markets. By pursuing restitution, disgorgement, penalties, and injunctive relief, the CFTC aims to hold wrongdoers accountable for their actions and deter fraudulent practices in the realm of retail forex commodity pools. Individuals and investors are urged to remain vigilant, utilize the CFTC's resources, and report suspicious activities to help combat financial fraud.
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