The Commodity Futures Trading Commission brought one case and settled another where it alleged that companies and their principals engaged in illegal off-exchange retail-financed or leveraged transactions involving precious metals. In one matter, the CFTC sued Oakmont Financial, Inc. and Joseph Dicrisci, its owner, in a Florida federal court claiming that, from at least July 16, 2011, through at least July 27, 2012, they solicited and accepted orders for the prohibited sale of precious metals from retail customers to be introduced to HunterWise Commodities, LLC, a purported precious metals wholesaler and clearing firm. Previously, another Florida federal court found HunterWise itself to have engaged in the same type of prohibited sales (click here for details). In the other action, the CFTC settled a complaint against Worth Group Inc., Andrew Wilshire and Eugenia Mildner, claiming the defendants also engaged in similar prohibited sales of precious metals from at least July 16, 2011, through August 13, 2013. Among other sanctions, all defendants agreed to pay restitution, jointly and severally, of $1.25 million, and Worth and Mr. Wilshire, jointly and severally, a fine of $1.25 million too.
Legal Weeds: In general, no purchase or sale of a commodity for future delivery may occur unless the transaction is conducted on or subject to an exchange appropriately designated by the Commodity Futures Trading Commission. Forward sales of commodities where delivery is contemplated and occurs are generally excluded from this requirement. However, forward sales do not include leveraged or financed sales of physical commodities to retail persons (e.g., not so-called eligible contract participants or eligible commercial entities) where delivery of the physical commodity does not occur within 28 days. (Click here to review the relevant statutory provision, Section 2(c)(2)(D) of the Commodity Exchange Act. Click here for information regarding Jay Grossman, a Florida-based attorney, who was sued and settled an enforcement action brought by the CFTC related to his alleged aiding and abetting of multiple clients in their operation of illegal precious metal schemes for retail clients in the article, "Florida Lawyer Settles CFTC Complaint Charging He Aided and Abetted His Clients’ Unlawful Precious Metals Scheme," in the July 26, 2015 edition ofBridging the Week.)