CFTC also Charges Belsky with Acting as an Unregistered Commodity Trading AdvisorWashington DC — The Commodity Futures Trading Commission (CFTC or Commission) filed a civil enforcement action in the U.S. District Court for the Eastern District of New York, charging Yehuda L. Belsky of Brooklyn, New York, and his firm Y Trading, LLC (Y Trading) with solicitation fraud in connection with binary options trading. The CFTC Complaint also charges Belsky with making false statements to the CFTC about his binary options trading and failing to register with the CFTC as a Commodity Trading Advisor, as required. According to the Complaint, Belsky solicited at least $1,258,000 from at least 14 customers to purportedly trade binary options on their behalf.
CFTC Director of Enforcement Comments
James McDonald, the CFTC’s Director of Enforcement, commented: “The enforcement action filed today demonstrates the Commission’s continued commitment to root out fraud in our markets. Today’s action also makes clear that the Commission will prosecute violations of its prior orders and those who provide false statements to the Commission. In our efforts to police our markets, we will continue to work closely and in parallel with our law enforcement partners to protect the public and to ensure that bad actors are held accountable.” Mr. McDonald specifically thanked the U.S. Attorney for the Eastern District of New York and his colleagues for their work in that office’s parallel criminal proceeding, which was also filed today.
The CFTC’s Complaint alleges that from at least June 22, 2015, through the present, Belsky, individually and on behalf of Y Trading, fraudulently solicited customers by making materially false statements, including that he was an expert binary options trader with a record of profitable binary options trading on behalf of multiple customers. At the same time, Belsky allegedly failed to disclose that he was misappropriating customer funds, had no binary options trading account in the name of Y Trading or in his own name from which to trade and had been the subject of a 2008 CFTC Order. Belsky, as alleged, also deceived some customers by providing a false binary options trading account statement and by using the fictitious name of “Jay Bell” to conceal his identity.
Violation of 2008 CFTC Order
The 2008 CFTC Order found that Belsky and a company he previously owned, Innovative Capital Management, LLC (Innovative), had committed a $1,250,000 fraud, furnished false documents to the National Futures Association, and misappropriated pool participants’ funds. The 2008 CFTC Order, among other things, imposed permanent trading bans on Belsky and Innovative, including a permanent prohibition from trading on any registered entities (see CFTC Press Release and Order, 5589-08, December 19, 2008).
As alleged, Belsky violated the 2008 CFTC Order by acquiring log-in credentials from at least three of his customers and surreptitiously trading their binary options accounts held on a registered exchange.
In its continuing litigation, the CFTC seeks full restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of federal commodities laws, as charged.
The CFTC appreciates the assistance of the U.S. Attorney for the Eastern District of New York and the Federal Bureau of Investigation.
CFTC Division of Enforcement staff members responsible for this action are Thomas Kelly, Dmitriy Vilenskiy, Danielle Karst, Hillary Van Tassel, Anthony Homer, John Einstman, Richard Foelber, and Paul G. Hayeck.
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CFTC’s Fraud Advisories, Including Binary Options Fraud
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud. In addition, the CFTC has issued a Consumer Alert to warn about fraudulent schemes involving binary options and their trading platforms. The Alert warns customers that the perpetrators of these unlawful schemes typically refuse to credit customer accounts, deny fund reimbursement, commit identity theft, and manipulate software to generate losing trades.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.