CFTC Orders an Advisor to Pay More Than $4 Million for Fraud and Registration Violations

(Hedgeweek) The Commodity Futures Trading Commission has issued an order filing and simultaneously settling charges against Sharief Deona McDowell, of Loma Linda, California, for fraud in connection with options on commodity futures contracts by a commodity trading advisor (CTA) and for failing to register as a CTA. The order requires McDowell to pay $2,376,509.96 in restitution and a $2,376,509.96 civil monetary penalty. The CFTC also ordered McDowell to cease and desist from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, and imposed permanent registration and trading bans.

Case Background

The order finds that from October 2018 through approximately March 2022, McDowell, doing business through a company she founded known as Presidential Investments LLC, engaged in a fraudulent scheme through which she solicited and accepted more than $2 million from at least 29 individuals or entities for the purported purpose of trading commodity futures contracts and options on commodity futures contracts on their behalf and then misappropriated the funds for her personal use.

By claiming to engage in discretionary trading of futures and options contracts on behalf of her clients, McDowell acted as a CTA, without being registered or exempt from registration with the CFTC as required by the CEA. In addition, in telephone, text message, and email communications with prospective and existing clients, McDowell knowingly made material misrepresentations and omitted material facts about her use of client funds and the profits purportedly earned by her clients. Among other misrepresentations, McDowell told clients that she used the funds they transferred to Presidential Investments to trade options and futures contracts on their behalf. Contrary to these statements, McDowell did not conduct any trading on behalf of her clients and instead knowingly misappropriated client funds for her direct personal benefit. To conceal and perpetuate her fraudulent scheme, McDowell issued fabricated trade confirmations and updates to clients that falsely reflected profitable returns from her supposed trading activity. 

Parallel Criminal Action

On November 30, 2022, McDowell entered a guilty plea in a related criminal case in the U.S. District Court for the Central District of California. She is scheduled to be sentenced on June 30, 2023. [See United States v. McDowell, 5:22-cr-00274-AB]

The CFTC cautions that orders requiring payment of funds to victims may not result in the recovery of any money lost because wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the

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