The Commodity Futures Trading Commission today announced that Judge Zahid N. Quraishi of the U.S. District Court for the District of New Jersey entered a final Judgment and Consent Order resolving the charges of Swapnil Rege, SwapStar Kapital LLC, and relief plaintiff Reema Rege.
The order states that Rege was involved in fraudulent solicitation and misappropriation. Rege also violated a prior CFTC consent that forbid him from trading commodity interest for at least three consecutive years. Reema Rege also received illegally obtained money or profits from the defendants. She is therefore not entitled to such funds and does not have a legitimate claim.
The order imposes permanent trading and registration bans against the defendants, and requires the defendants and relief defendant to pay, jointly and severally, $4,894,225 in disgorgement and pre-judgment interest of $161,335, with the relief defendant’s disgorgement obligation limited to the balances in specified accounts.
The order also imposes a permanent ban on the defendants from violating the Commodity Exchange Act and CFTC regulations. It also imposes a $200,000 civil monetary fine. The order resolves the CFTC’s complaint filed against the defendants and relief defendant on October 26, 2021.
According to the order, the defendants fraudulently solicited individuals for money to invest or lend. The misrepresentations included that such funds would be deposited; that investors and lenders would receive fixed returns, sometimes as high as 40% to 60%; that account holders could instantly redeem their funds, or that they could do so on short notice. The order further finds the defendants then used a portion of the solicited funds to trade commodity interests through accounts they owned, or accounts that were nominally owned by Rege’s spouse, Reema Rege, but controlled by Rege.
The order states that some of the funds were misappropriated by the defendants to pay personal expenses as well as to pay returns to account holders. This is similar to a Ponzi scheme. Rege also failed to disclose that he was banned from trading any commodity interest under the Prior Cftc Agreement for at least 3 years. Rege was also found to have violated the prior CFTC agreement by continuing trading commodity interests on or as a subject to any rules of any registered entities during the three-year period he was prohibited.
The CFTC cautions against the idea that orders requiring victims to repay funds may not always result with the recovery or replacement of lost funds. It is possible for wrongdoers not to have enough assets or funds.
The Securities and Exchange Commission (SEC), in a separate matter, announced previously that the U.S. District Court for the District of New Jersey entered final judgements on consent against Swapnil J. Rege and SwapStar Kapital LLC and relief defendant Reema Rege to resolve parallel allegations of violations of federal securities laws.
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