* Defendants accused of fraudulently marketing commodity
* Company lawyer says asked for ruling in Illinois
* CFTC seeks monetary penalties, restitution of client money
By Douwe Miedema
WASHINGTON, Dec 5 The top U.S. derivatives
regulator on Wednesday filed a civil complaint against Hunter
Wise Commodities and accused the company of fraudulently
marketing commodity contracts.
The Commodity Futures Trading Commission (CFTC) alleges that
Hunter Wise, based in Las Vegas, had improperly taken in at
least $46 million in customer funds since July 2011.
The 2010 Dodd-Frank law expanded the CFTC's jurisdiction
over such transactions, it said, demanding that they be executed
on exchanges or other regulated markets.
A lawyer representing Hunter Wise said the company had a
different view on how to interpret the law, and had asked a
judge in the Northern District of Illinois to make a ruling in
the matter, which was due on Dec. 11.
The CFTC's complaint showed how the defendants claimed to
sell physical metals to retail customers. Customers would make a
down payment, and the companies would then arrange loans for the
balance of the purchase price.
But these statements were false, and the transactions were
just paper deals, the CFTC alleges.
The CFTC had warned against these practices before, saying
that companies frequently do not purchase any physical metals,
instead simply keeping the customer's funds.
Leveraged commodity transactions were unlawful, the CFTC
said, unless executed on a regulated exchange.
The CFTC asked the Southern District Court of Florida, where
Hunter Wise did business, for civil monetary penalties, to order
the defendants to stop their activities, and to make full
restitution to people whose funds they had received illegally.
(Reporting by Douwe Miedema; Editing by Lisa Shumaker)