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Olint under US pressure
Futures regulator files complaint of 'suspicious activity'
Friday, July 04, 2008
SMITH... operator of Olint
An independent regulatory organisation in the United States has filed complaints of "suspicious activity" against Olint and TCI FX Traders, two investment clubs operated by Jamaican David Smith.
The National Futures Association (NFA), a self-regulatory organisation for the US futures industry, also filed a complaint to its Business Conduct Committee against I Trade FX LLC and one of its principals, Isaac Martinez.
"For approximately nine months in 2007, I-Trade listed David Smith as a principal based on his having contributed almost 100 per cent of the firm's capital," said the NFA in its complaint filed on June 30.
The NFA highlighted the Financial Services Commission's investigation of Olint for allegedly offering securities without a licence, and pointed to the cease and desist order issued on Olint by the FSC.
According to the NFA, it opened an investigation into Smith because of concerns it had about the source of funds he used to capitalise I-Trade.
The NFA said that as part of its investigation, it asked I-Trade to provide Smith's personal bank records. "However, I-Trade claimed that it was unable to obtain Smith's bank records and, therefore, withdrew Smith as a principal on December 31, 2007 and repaid his membership interest in the firm," said the document.
"Although unable to review Smith's bank records, NFA was able to review the activity in the I-Trade accounts of Smith's investment clubs (ie, Olint and TCI). NFA's review of the activity in these accounts, as well as other accounts at I-Trade, revealed suspicious activity, which I-Trade failed to report by filing a Suspicious Activity Report with federal authorities," the complaint added.
According to the NFA, "highly suspicious activity occurred in a number of I-Trade's customer accounts between November 2006 and April 2008. Most of the suspicious activity occurred in the accounts related to Smith (ie, Olint and TCI) and involved activity identified in both NFA's Interpretive Notice and I-Trade's own AML (anti-money laundering) programme as "red flags". This activity included extensive and unexplained wire activity; deposits followed by a request to transfer the funds to a third party without any apparent business reason; and unexplained, extensive wire activity with very low trading levels in the accounts".
The complaint, sworn to before Illinois notary public Mary Patton, also alleged that in November 2006, the NFA reviewed the activity in an account Olint opened with I-Trade in September 2006. "The Olint account opening documents indicated Smith and his wife owned Olint and that the funds in the account came from them only," said the document.
"During the first two months this account was open, no trading activity occurred; however, during this time, Olint made four deposits totalling approximately [US]$59 million and eight withdrawals totalling about [US]$35.5 million."
The NFA also said it identified and reviewed the activity in three other Olint accounts, which had deposits ranging from US$500,000 to US$2 million.
Said the NFA: "While trading occurred in these accounts, only a fraction of the account equity in these accounts was used for trading. At the end of March 2007, Olint withdrew the bulk of the funds from these three accounts in amounts ranging from about [US]$938,000 to over [US]$1.7 million."
Smith and Martinez have 30 days from the date of the filing of the complaint in which to file written responses.
Futures regulator files complaint of 'suspicious activity'
Friday, July 04, 2008
SMITH... operator of OlintAn independent regulatory organisation in the United States has filed complaints of "suspicious activity" against Olint and TCI FX Traders, two investment clubs operated by Jamaican David Smith.
The National Futures Association (NFA), a self-regulatory organisation for the US futures industry, also filed a complaint to its Business Conduct Committee against I Trade FX LLC and one of its principals, Isaac Martinez.
"For approximately nine months in 2007, I-Trade listed David Smith as a principal based on his having contributed almost 100 per cent of the firm's capital," said the NFA in its complaint filed on June 30.
The NFA highlighted the Financial Services Commission's investigation of Olint for allegedly offering securities without a licence, and pointed to the cease and desist order issued on Olint by the FSC.
According to the NFA, it opened an investigation into Smith because of concerns it had about the source of funds he used to capitalise I-Trade.
The NFA said that as part of its investigation, it asked I-Trade to provide Smith's personal bank records. "However, I-Trade claimed that it was unable to obtain Smith's bank records and, therefore, withdrew Smith as a principal on December 31, 2007 and repaid his membership interest in the firm," said the document.
"Although unable to review Smith's bank records, NFA was able to review the activity in the I-Trade accounts of Smith's investment clubs (ie, Olint and TCI). NFA's review of the activity in these accounts, as well as other accounts at I-Trade, revealed suspicious activity, which I-Trade failed to report by filing a Suspicious Activity Report with federal authorities," the complaint added.
According to the NFA, "highly suspicious activity occurred in a number of I-Trade's customer accounts between November 2006 and April 2008. Most of the suspicious activity occurred in the accounts related to Smith (ie, Olint and TCI) and involved activity identified in both NFA's Interpretive Notice and I-Trade's own AML (anti-money laundering) programme as "red flags". This activity included extensive and unexplained wire activity; deposits followed by a request to transfer the funds to a third party without any apparent business reason; and unexplained, extensive wire activity with very low trading levels in the accounts".
The complaint, sworn to before Illinois notary public Mary Patton, also alleged that in November 2006, the NFA reviewed the activity in an account Olint opened with I-Trade in September 2006. "The Olint account opening documents indicated Smith and his wife owned Olint and that the funds in the account came from them only," said the document.
"During the first two months this account was open, no trading activity occurred; however, during this time, Olint made four deposits totalling approximately [US]$59 million and eight withdrawals totalling about [US]$35.5 million."
The NFA also said it identified and reviewed the activity in three other Olint accounts, which had deposits ranging from US$500,000 to US$2 million.
Said the NFA: "While trading occurred in these accounts, only a fraction of the account equity in these accounts was used for trading. At the end of March 2007, Olint withdrew the bulk of the funds from these three accounts in amounts ranging from about [US]$938,000 to over [US]$1.7 million."
Smith and Martinez have 30 days from the date of the filing of the complaint in which to file written responses.
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