CFTC Slaps Two Commodity Pool Operators with Fraud Charges

The US commodities markets regulator, CFTC, has moved against two commodity pool operators and charged LJM Partners Ltd and LJM Funds Management Ltd, which collectively operated as LJM, with commodity pool fraud and also for releasing false statements about losses. Charges were also brought against Anthony J. Caine, chairman and owner of the two companies, and chief portfolio manager Anish Parvataneni.

Thursday’s announcement detailed that the two companies operated between mid-2016 and 2018 managing several commodity pools, a mutual fund, and individually managed client accounts. At the peak, the firms had more than $1 billion in assets under management but faced heavy losses after a 20 points spike in VIX in 2018, after which they closed their businesses.

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The companies are further blamed for hiding their losses, issuing false and misleading statements. Charges for loose risk management practices in options trading strategies were also brought.

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The chairman was charged for his liability for the companies’ misrepresentations and also for failing to diligently supervise employees and agents.

“It is imperative that all participants in our markets receive full disclosure of material information and protection from fraudulent practices,” said Vincent McGonagle, CFTC’s acting enforcement director.

“When companies or individuals make false or misleading statements about the risks of trading, or fail to diligently supervise their employees or agents’ activities relating to their business as CFTC registrants, the CFTC will seek to hold them accountable.”

The commission already settled fraud charges against LJM’s former chief risk officer and registered AP of LJM, Arjuna Ariathurai. He agreed to pay a civil monetary penalty of $150,000 and have to disgorge $83,333, along with prejudgment interest of $14,111. He also received a cease and desist order, requiring him not to engage as a CFTC registrant for three years.

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