CFTC Fines California Resident Over $4.7m Fine Over Fraudulent Activity With Options

The US derivatives market regulator, the Commodity Futures and Trading Commission (CFTC) has imposed over $4.7M fine against Sharief Deona McDowell. McDowell faces this fine over activity with options on commodity futures contracts by a commodity trading advisor (CTA).

CFTC fines California resident $4.7M

Besides being fined for options fraud, McDowell is also being accused of his failure to register as a CTA. The CFTCX has already settled the charges with the trader. The official announcement on the development says that McDowell will be mandated to pay over $2.37 million worth of restitution and a similar amount for a civil monetary penalty.

CFTC is a regulatory body in charge of the commodities market. The regulator has also issued a cease and desist order against McDowell. They have also restricted the trader from conducting further violations of the US laws on the commodity and derivatives market. Additionally, it has also restricted McDowell from violating American laws further.

McDowell also faced a permanent ban on registration and trading. However, despite imposing the hefty fine and restriction, the regulator has said that it cannot guarantee that the regulator can fully compensate the affected victims.

The fine and the other actions taken by the CFTC come after McDowell took a guilty plea in November last year. At the time, he was facing a criminal case that is currently pending. The sentencing for the case has been scheduled for June 30.

McDowell operated a fraudulent scheme

The CFTC is one of the top regulatory agencies in the United States. The US regulator has said that McDowell was behind the Presidential Investments LLC. The latter is a company that McDowell founded between October 2018 and March 2022.

While running this company, McDowell said that he participated in the discretionary trading of futures and options contracts on behalf of clients. She also operated as a CTA without having the necessary qualifications to be one. The entire operation that was run by McDowell was fraudulent in nature.

The company’s fraudulent investment scheme affected at least 29 individuals or institutions, with the losses being estimated to be over $2 million. McDowell was also blamed for failing to use investor funds in the appropriate manner and instead redirected the monies towards personal use.

McDowell usually communicated with prospective investors using text messages, email, and telephone. The regulator also alleged that McDowell made material misrepresentations knowingly while failing to provide the material facts about how she used client funds and the profits that were reportedly earned by clients that invested in the company.

McDowell has also said that the funds that were transferred to Presidential Investments went towards trading options and futures contracts on behalf of clients. However, she did not conduct any trading, and instead, client funds went toward her own benefit.

The CFTC has also said that McDowell released fake updates and trade confirmations that did not depict the profitable returns from the alleged trading activity in a factual manner.