US regulator charges forex trader with fraud

A major US regulator has lodged charges against a man who is accused of offering fraudulent foreign exchange opportunities.

James Frederick Walsh, who reportedly called himself a “master trader”, will face the charges thanks to action from the Commodity Futures Trading Commission (CFTC).

The charges, which were lodged at the Texas Western District Court, pertain to allegations that between September 2019 (or earlier) and up to the present, Walsh engaged individuals in what he claimed was off-exchange foreign exchange trading.

He supposedly claimed that he had a lot of foreign exchange trading success, and pushed his allegedly fraudulent agenda via the use of social media websites.

He apparently told people that he was bringing in profits of between 8% and 11% a month for his clients – or in other cases, a flat fee of 3% guaranteed on a monthly basis.

He also claimed that he was able to access insider information on a legal basis – and that he could use this to find out what was going to happen to the forex markets, and how they might move.

However, Walsh is now facing serious fraud charges, and is accused of breaking various aspects of the Commodity Exchange Act.

The CFTC is looking for various remedies, including civil monetary penalties and bans on trading in the future.

This is far from the first time that Walsh has been hit by accusations from a regulator.

In April of last year, for example, it was revealed that Walsh had been sent a cease and desist letter from the Texas State Securities Board.

When this letter was published, the Board accused Walsh of exploiting the coronavirus pandemic to make money through his offerings.

“According to the order, Walsh recently told potential investors he was earning greater profits because of the volatility the threat of COVID-19 has engendered in the markets,” it said.

“Walsh claimed that in a recent 10-day period he earned $46,000 in profit on an account worth $100,000, according to the order,” it added.

It went on to accuse him of failing to properly outline the risks when speaking to traders.

“Walsh is not, however, telling investors of the numerous risks in trading the currencies of other countries,” it said.

“These include fluctuations in a country’s interest rates, the impact of stock, bond, and commodity markets on currency exchange rates, and the possibility that technical problems can stall trades,” it added.

It also claimed that Walsh had at first gone along with requirements to cease providing trading and investment opportunities but then went back on his word.

“Walsh is violating the Texas Securities Act because neither the investments nor Walsh are registered in Texas, according to the order,” the Board alleged.

It added: “Walsh initially agreed to stop offering investments in the trading program until he became compliant with the Securities Act.

“But he continued to illegally and fraudulently offer the securities, according to the order, threatening immediate financial harm to Texas residents.”

About the author: Justin Freeman

Justin is an active trader with more than 20-years’ industry experience of working for big banks and hedge funds. He has an inside knowledge of how the financial markets work, thanks to roles including trader on a $750m Event-Arbitrage desk and CRO and COO of hedge funds running a variety of strategies. From stat-arb and trend-following CTA to fixed-income relative value. Firm’s he has worked at include big banks like Citi, and prominent hedge funds including D. E. Shaw and Millennium Capital Management.

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