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CFTC Charges Companies and Associates with Failing to Register with the CFTC

CFTC Charges Companies and Associates with Failing to Register with the CFTC

(HedgeCO.Net) The U.S. Commodity Futures Trading Commission has issued an order filing and settling charges against Silver Star FX, LLC d/b/a Silver Star Live (SSL) of New Mexico and Silver Star Live Software LLC (SSLS) of Florida, and two officers of those firms, Candace Ross-Mahmoud and Hassan Mahmoud of California (collectively, respondents). In its order, the CFTC found that SSL and SSLS acted as unregistered commodity trading advisors and that Ross-Mahmoud and Mahmoud acted as unregistered associated persons of both SSL and SSLS. The order requires the respondents, who are jointly and severally liable, to pay a $75,000 civil monetary penalty and to cease and desist from future violations of the Commodity Exchange Act.

The order finds that from at least July 2018 to March 2019, on behalf of SSL and, later, SSLS, Ross-Mahmoud and Mahmoud solicited customers to open discretionary trading accounts (or supervised other persons who did so), and offered to trade in customers’ retail forex accounts through a “forex autotrader.” The autotrader used an algorithm to trade multiple currency pairs, automatically entering and exiting trades without customer intervention. The autotrader also purportedly automatically hedged losing trades to mitigate losses. By virtue of the autotrader, SSL and SSLS exercised discretionary trading authority over retail customers’ forex accounts.

As found in the order, respondents marketed the autotrader using the slogan “Our Trades, Your Account,” and in promotional video presentations, Mahmoud described the autotrader as “95% hands-off” after initial set up. Although customers were required to set up the autotrader and load periodic updates, those efforts were supported by SSL and SSLS staff. Further, respondents touted the autotrader as suitable for people without any prior forex trading experience. Ross-Mahmoud and Mahmoud and, at their direction, the affiliates of SSL and SSLS, instructed individual customers to open and fund accounts at retail forex exchange dealers and link the accounts to the autotrader.

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