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(Bloomberg) — The US Commodity Futures Trading Commission has put four lawyers and an investigator on administrative leave amid allegations of employee misconduct in a fraud case against an online trading platform, according to people familiar with the matter.
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The Chicago-based employees were sidelined following the issuance of a still-sealed report from a special judge investigating alleged agency misconduct in a case against Traders Global Group Inc., a proprietary trading firm known as My Forex Funds.
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None of the agency employees responded to requests for comment.
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“A report and recommendation has been filed on the Special Master’s review of allegations that CFTC enforcement attorneys and management engaged in numerous instances of willful and bad faith misconduct, including making false statements to the court,” the agency said in a statement to Bloomberg. “That report is currently under seal. Therefore, the CFTC has no further comment at this time.”
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The agency on Monday separately released a statement saying an unspecified number of staff were on administrative leave while the agency investigated “potential violations of laws, government ethics requirements and professional rules of conduct.” The statement didn’t mention My Forex Funds or name any individuals.
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The CFTC in August 2023 sued My Forex Funds and its chief executive officer, Murtuza Kazmi, accusing the firm of operating a large-scale, Ponzi-like scheme. The firm allegedly reaped hundreds of millions in profits, with the CEO buying a $1.6 million Lamborghini Aventador and a multimillion-dollar estate in Canada, according to the CFTC.
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“Traders Global is a fraud,” the agency said at the time. The firm wasn’t a third-party liquidity provider, as it purported, but was the counterparty to “substantially all” customer trades.
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The firm and its CEO said it would “vehemently dispute the allegations brought forth by the CFTC.”
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A judge the same month granted an order freezing assets of the CEO and My Forex Funds. The freeze request included a sworn statement from an agency investigator indicating that $31.5 million had been transferred to an account controlled by the CEO.
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The transfers were actually payments to Canadian tax authorities.
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“Counsel for the CFTC should have corrected this error, and regrets failing to do so,” the agency said in a December 2023 filing. The firm in 2024 called on the court to sanction the CFTC for the misstep.
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