The U.S. Commodity Futures Trading Commission (CFTC) has announced that the U.S. District Court for the Northern District of Georgia entered an order granting the CFTC’s motion for entry of default judgment against defendants Silver Star FX, LLC d/b/a Silver Star Live (SSL), a former New Mexico limited liability company, Silver Star Live Software LLC (SSLS), a Florida limited liability company, and David Wayne Mayer (known by the pseudonym “Quicksilver”) of Roswell, Georgia. The order finds that all three defendants are liable for solicitation fraud in connection with forex transactions, Commodity Trading Advisor (CTA) fraud, as well as multiple CFTC registration violations.
The order requires SSLS and Mayer to pay $3,712,035.93 in restitution jointly and severally and SSL to pay $198,143.03 in restitution. The order further imposes $9,798,107.79 in civil monetary penalties on SSLS; $9,798,107.79 on SSL; and $1,338,000 on Mayer. Additionally, under the order, defendants are permanently enjoined from engaging in conduct that violates the Commodity Exchange Act (CEA), registering with the CFTC, and trading in any CFTC-regulated markets.
The order resolves a CFTC enforcement case filed on June 11, 2020.
Case Background
In the order, U.S. District Judge Robert P. Boulee found that from at least July 2018 to March 2019, the defendants fraudulently solicited customers to open discretionary trading accounts, and offered to trade those accounts, through a fully automated retail foreign currency (forex) trading software system that Mayer created. The order further finds that the defendants solicited customers through online videos, social media, and in-person marketing events. As found in the order, the solicitations contained material misrepresentations and omissions regarding Mayer’s qualifications and trading experience. Additionally, as found in the order, the defendants misrepresented the forex trading system’s performance history and expected trading profits. Further, as found in the order, the defendants failed to disclose that Mayer never opened a live trading account using the forex trading system. The order further found that Mayer failed to register as an associated person of a CTA; and that SSL and SSLS unlawfully permitted Mayer to become or remain associated with them.
Related CFTC Enforcement Action
In a previous, related case, the CFTC found that SSL and SSLS acted as unregistered CTAs, and that two former officers acted as unregistered associated persons of both SSL and SSLS.