Matthew J. Marcus and his company to pay for money pass scheme
On June 30, 2016, Judge Milton I. Shadur of the U.S. District Court for the Northern District of Illinois entered a Consent Order settling CFTC charges against Defendants Matthew J. Marcus of California and his company, Tech Power Inc., a Nevada corporation located in California, for engaging in fictitious single stock futures transactions and trading non-competitively on OneChicago LLC (OneChicago), an electronic futures exchange in Chicago, Illinois.
The Court’s Order requires Marcus and Tech Power jointly to pay a $250,000 civil monetary penalty. The Order also permanently prohibits Marcus and Tech Power from further violations of the Commodity Exchange Act and CFTC Regulations, as charged, and enters trading, solicitation, and registration bans against Marcus for a period of 5 years.
The Order stems from a CFTC Complaint filed on April 14, 2015. The Order finds that over seven consecutive trading days from January 28, 2014 to February 5, 2014, Marcus carried out a scheme, commonly known as a “money pass,” whereby he moved money from an account carried in the name of MetroWest Law Corporation, a Canadian law firm under the custodianship of the Law Society of British Columbia, to Tech Power, through a series of 1,248 pre-arranged, non-competitive trades using single stock futures contracts on OneChicago.
The Order finds that Marcus was able to carry out his scheme because the owner of the MetroWest account, John D. Briner, a disbarred Canadian attorney, provided Marcus, his former client, with his unique password and login information and informally authorized Marcus to enter trades for the MetroWest account.
The Order further finds that Marcus traded the two accounts almost exclusively against each other on OneChicago and was able to do this, in part, by placing nearly simultaneous, matching orders and trading in eight illiquid single stock futures products, which virtually eliminated the possibility of trading with a different counterparty.
In the vast majority of instances where Marcus initiated and closed out a position, the Order finds that it resulted in a loss to MetroWest and a gain to Tech Power. Overall, the trades resulted in the unlawful transfer of $390,000 from MetroWest to Tech Power, according to the Order.
The CFTC’s litigation against the Canadian Defendants, Briner and MetroWest, is continuing. ■