Following the U.S. regulatory authority SEC, the CFTC is now also taking action against the two affiliates that have advertised fraudulent binary options schemes. According to SEC and CFTC, Peter Szatmari and David Sechovich have contributed to investment fraud with binary options and acted as unlicensed brokers. FinTelegram has already reported on the SEC action here.
The U.S. Commodity Futures Trading Commission (CFTC) announced that it filed enforcement actions against two affiliate marketers, David Sechovich and Peter Szatmari for creating and disseminating millions of fraudulent solicitations to open and fund retail binary options trading accounts on websites operated by unregistered, off-exchange brokers.
The charges
Allegedly, both individuals instructed unsuspecting investors to open and fund binary options accounts with recommended brokers to get free access to automated trading software that purported to generate astronomical profits with no risk of loss. According to the filings, these marketing materials included numerous false or misleading statements, including:
- Misrepresenting that trading binary options would generate
significant even guaranteed, profits while minimizing or disclaiming any risks; - Claiming that the automated trading software had been tested and generated profits when, in reality, the software had not been tested, did not work as claimed, and in some cases did not exist;
- Portraying actors or fake personalities as actual owners or users of the automated trading software, without disclosing that they were not real users of the software; and
- Depicting fictitious trading results as real.
The CFTC further alleges that Sechovich and Szatmari each failed to disclose that they received a fee from the binary options brokers they recommended every time a new account was opened and funded as a result of their solicitations.
Million-dollar settlement
The CFTC issued an order filing and settling fraud charges against David Sechovich, assessing more than $2.8 million in penalties and restitution. The order requires Sechovich to cease and desist from engaging in future violations of the Commodity Exchange Act and CFTC regulations, to return over $1.8 million to defrauded customers and to pay a civil monetary penalty of more than $949,000. It also subjects him to trading and registration bans.
In the other action, the Commission filed a civil enforcement action in the United States District Court for the District of Hawaii against Peter Szatmari.
The two matters are related to prior CFTC actions in federal district courts in Florida alleging fraud and prohibited advertising against several other individuals and entities.
