Futures Trading Firm Accused of Fraud Agrees to Shut Down
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WASHINGTON — A futures trading firm with 17 offices in California, Florida, New York and Michigan has agreed to shut down its operations as part of its settlement of fraud charges leveled by the Commodity Futures Trading Corp.
Chilmark Commodities Corp., without admitting or denying the allegations, agreed to the revocation of its registration as a broker. It also consented to an injunction barring it from “fraud in connection with soliciting customers to trade commodity options on futures contracts,” the CFTC said in a release Tuesday.
The commission also charged Chilmark with unauthorized trading and with failing to provide customers with the price of the option prior to purchase.
The consent order providing for a permanent injunction was approved Sept. 15 by the U.S. District Court for the Southern District of Florida. Simultaneously, an administrative complaint by the commission was settled.
Chilmark, founded in 1985, was a medium-sized firm operating in New York City, but began expanding rapidly in 1986, opening seven offices in southern Florida. By 1987, it had 250 sales brokers and took in more than $13 million in commissions.
The CFTC accused Chilmark of “high-pressure sales tactics typical of a boiler-room operation” and of “routinely (making) false or deceptive statements in soliciting customers.”
The complaint “described a sales operation where the paramount goal was to maximize commission income by maximizing the number of options purchased by customers and misrepresenting the profit potential,” the agency said.
Most of Chilmark’s customers spent 40% to 60% of their investment on commissions, it said.
Chilmark officials could not be reached for comment at their New York headquarters Tuesday evening.
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