U.S. derivatives regulators have charged a Canadian attorney and his law firm with allegedly participating in a series of abusive trades.
The U.S. Commodity Futures Trading Commission (CFTC) said Friday it has filed a civil enforcement action in federal court in Chicago against a Vancouver-based lawyer, John Briner, and his firm, MetroWest Law Corp., and a California man, Matthew Marcus, and his company, Tech Power, Inc. alleging that they engaged in fictitious futures transactions and non-competitive trading on OneChicago LLC.
The allegations have not been proven.
In its complaint, the CFTC alleges that over seven consecutive trading days in early 2014, the defendants engaged in 624 trades between a MetroWest account and a Tech Power account that involved 1,248 perfectly matched pre-arranged, non-competitive transactions in single stock futures contracts that are listed on OneChicago.
“By structuring the transactions in this way, the defendants allegedly were able to ensure that MetroWest would trade with Tech Power and that Tech Power would always profit from the transactions,” the CFTC alleges. In carrying out these trades, the regulator says that the firms conducted a “money pass” between the two accounts and moved at least $390,000 from MetroWest to Tech Power.
The CFTC is seeking disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations. It reports that a U.S. district court judge has handed down an order freezing certain assets, and prohibiting the defendants in the case from destroying documents.
Earlier this year the U.S. Securities and Exchange Commission (SEC) also brought allegations against Briner in connection with a scheme to take control of a number of microcap companies that the SEC was worried could be used in pump-and-dump schemes. It alleged that Briner orchestrated the scheme, which entailed creating shell companies supposedly involved in mining activities, and installing figurehead CEOs, when Briner was actually directing the firms. He was suspended from practising before the commission for five years back in 2010. The SEC’s latest allegations have not been proven either.