The US Commodity and Futures Trading Commission announced that the court imposed a $1.2 million penalty on Michael Salerno and his companies Black Diamond Forex LP, BDF Trading LP and Advanta FX for fraudulently soliciting members of the public to become forex traders.
The court’s order from 24 September 2020 requires the defendants to pay $335,149 in restitution and a civil penalty of $894,000. The order also requires that Black Diamond Investment Group to pay $1,488 in disgorgement. Additionally, the order permanently prohibits the defendants from engaging in conduct that violates the Commodity Exchange Act, from registering with the CFTC and from trading in any CFTC-regulated markets.
CFTC brought the enforcement action on17 April 2018 to the court charging the defendants with fraudulent misrepresentations and misuse of funds.
The US watchdog found that between January 2017 and March 2018 Salerno and his Pennsylvania-based companies solicited individuals on websites such as LinkedIn and Indeed.com and their own websites to become forex traders. The defendants required prospective traders to pay risk deposits and falsely promised to match it with some multiple of company funds in proprietary forex trading accounts and falsely promised to share a portion of the trading profits with the traders and to pay performance bonuses.
Additionally, the defendants also falsely touted Salerno’s successful forex trading career and falsely assured prospective traders that Salerno had accumulated $9.5 million in real estate sales that he was using to fund his proprietary trading companies. While actually, Salerno had not traded successfully in the forex markets, had filed for bankruptcy in the same year he claimed to have made real estate sales and had been convicted of a felony and sentenced to 21 months in prison in 2005. Moreover, they never established live trading accounts for anyone and misappropriated the risk deposits.
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