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U.S. Commodity Futures Trading Commission v. Hall

United States District Court, M.D. North Carolina

September 30, 2014

U.S. COMMODITY FUTURES TRADING COMMISSION, Plaintiff,
v.
NEAL E. HALL, d/b/a SHOWMEMYFUTURE.COM, Defendant

Order Filed: November 21, 2013

Page 445

For U.S. COMMODITY FUTURES TRADING COMMISSION, Plaintiff: GREGORY A. SCOPINO, LEAD ATTORNEY, TIMOTHY J. MULREANY, TRACEY B. WINGATE, U.S. COMMODITY FUTURES TRADING COMMISSION, WASHINGTON, DC.

For NEAL E. HALL, doing business as SHOWMEMYFUTURE.COM, Defendant: C. ORVILLE LIGHT, EDEN, NC.

Page 446

ORDER

James A. Beaty, Jr, United States District Judge.

This matter is before the Court on Recommendation of the United States Magistrate Judge [Doc. #42] recommending that Plaintiff U.S. Commodity Futures Trading Commission's Motion for Summary Judgment [Doc. #37] be granted and that a permanent injunction and fine be imposed against the Defendant. The Recommendation was filed on November 21, 2013, and notice was served on the parties pursuant to 28 U.S.C. § 636(b). On November 27, 2014, Defendant filed timely Objections to the Recommendation [Doc. #44]. Defendant, thereafter, filed additional Objections [Doc. #48] on January 10, 2014, to which Plaintiff responded [Doc. #49].[1] The Court has now reviewed de novo the Objections and the portions of the Recommendation to which objection was made, and finds that the Objections do not change the substance of the United States Magistrate Judge's ruling. The Magistrate Judge's Recommendation [Doc. #42] is therefore affirmed and adopted.

Page 447

IT IS THEREFORE ORDERED, Plaintiff's Motion for Summary Judgment requesting injunctive relief is HEREBY GRANTED and Defendant, pursuant to 7 U.S.C. § 13a-1(d)(1), is to pay $210,000 as a monetary penalty for his non-compliance with the Commodity Exchange Act, 7 U.S.C. § 6m(1), and Federal Regulations, 17 C.F.R. § 4.41(a)(3) and 17 C.F.R. § 4.41(b)(1).

IT IS FURTHER ORDERED, that Defendant, his agents, servants, employees, assigns, attorneys, and persons in active concern of participation with the Defendant, including any successor thereof, is enjoined and prohibited from engaging, directly or indirectly, in any conduct or activity that:

(a) violates Section 4m(1) of the Act, 7 U.S.C. § 6m(1), or Regulations 4.41(a)(3) and (b)(1), 17 C.F.R. § § 4.41(a)(3) and (b)(1);
(b) results in trading on or subject to the rules of any registered entity (as that term is defined in Section 1a of the Act, codified as amended at 7 U.S.C. § 1a(40));
(c) involves controlling or directing the trading for or on behalf of any other person or entity, whether by power of attorney or otherwise, in any account involving commodity futures, options on commodity futures, commodity options (as that term is defined in Regulation 1.3(hh), 17 C.F.R. § 1.3(hh)) (" commodity options" ), and/or foreign currency (as described in Sections 2(c)(2)(B) and 2(c)(2)(C)(i) of the Act, as amended, 7 U.S.C. § § 2(c)(2)(B) and 2(c)(2)(C)(i)) (" forex contracts" );
(d) relates to or otherwise involves soliciting, receiving, or accepting any funds from any person for the purpose of purchasing or selling any commodity futures, options on commodity futures, commodity options, and/or forex contracts;
(e) relates to or otherwise involves applying for registration or claiming exemption from registration with the Commission in any capacity, and engaging in any activity requiring such registration or exemption from registration with the CFTC, except as provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9); and
(f) constitutes acting as a principal (as that term is defined in Regulation 3.1(a), 17 C.F.R. § 3.1(a)), agent or any other officer or employee of any person registered exempted from registration or required to be registered with the CFTC, except as provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9).

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

L. Patrick Auld, United States Magistrate Judge.

The instant matter comes before the undersigned United States Magistrate Judge for a recommended ruling on Plaintiff's Motion for Summary Judgment Against Defendant Neal E. Hall (Docket Entry 37). (See Docket Entry dated July 13, 2012.) For the reasons that follow, the instant Motion should be granted.

I. BACKGROUND

Plaintiff, the United States Commodity Futures Trading Commission (" CFTC" ), brought this action against Defendant, proceeding pro se, for violations of: (1) Section 4m(1) of the Commodity Exchange Act (the " Act" ), 7 U.S.C. § 6m(1), for failure to register as a commodity trading advisor (" CTA" ) (Docket Entry 1, ¶ ¶ 29-33); (2) Commission Regulation 4.41(a)(3), 17 C.F.R. § 4.41(a)(3),

Page 448

for failure to provide the required cautionary statements concerning client testimonials (Docket Entry 1, ¶ ¶ 34-38); and (3) Commission Regulation 4.41(b)(1), 17 C.F.R. § 4.41(b)(1), for failure to provide the required cautionary statement regarding limitations of simulated or hypothetical trading results (Docket Entry 1, ¶ ¶ 39-42). [1]

The unrebutted evidence before the Court [2] reveals the following:

(1) " during the relevant period, [Defendant] wrote and continued to write the [content] for the website, www.showmemyfuture.com [(the 'Website')]" (Docket Entry 38-1 at 79-80);

(2) " the [Website] advertises [Defendant's] trading system for E-mini S& P's 500 Futures contracts" (id. at 80);

(3) " during the relevant period, in exchange for payment of a monthly fee, [Defendant] advised [his] . . . subscribers, via e-mail[,] as to when they should open and close positions in E-mini S& P's 500 Futures Contracts" (id.);

(4) " from at least June of 2010 until May 31, 2010, [Defendant] plac[ed] trades in some of [his] client[s'] trading accounts" (id.);

(5) " from at least June of 2010 until May 31, 2011, some of [Defendant's] clients paid [him] via Pay Pal to place trades in their trading accounts" (id. at 81);

(6) " [Defendant] continued to place trades in some of [his] client[s'] trading accounts in exchange for payment via Pay Pal, even after [his] power of attorney over those accounts had been revoked" (id.);

(7) " during the relevant time period, [the Website] contained the statement, 'Our members have historically doubled their money in less than 12 months'" (id. at 82-83);

(8) " at different times during the relevant time period, [the Website] contained the following statements: A, 'You can view information about a managed account that we can trade for you' . . . [and] B, 'You can view information about an auto trade ...


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