Earlier this month, the Commodities Futures Trading Commission (CFTC) hit Monex – which provides platforms for trading precious metals like gold, silver, platinum, and palladium – with a multi-hundred-million dollar enforcement action, charging the company with fraud.
In a statement the CFTC said the following:
The U.S. Commodity Futures Trading Commission announced that on September 6, 2017, it filed a civil injunctive enforcement action in the U.S. District Court for the Northern District of Illinois against three affiliated companies located in Newport Beach, California, Monex Deposit Company, Monex Credit Company, and Newport Services Corporation(collectively, Monex), and Monex’s principals Louis Carabini and Michael Carabini. The CFTC Complaint charges the Defendants, among other claims, with defrauding thousands of retail customers nationwide out of hundreds of millions of dollars, while executing thousands of illegal, off-exchange leveraged commodity transactions.
Business as usual at precious metals dealer Monex
On Monday, this reporter saw an advertisement for Monex on The Intelligence Report with Trish Regan on the Fox Business Channel, the business-focused sister station to the Fox News Channel.
Prior to the announcement, Monex had been advertised heavily across US cable news networks .
An email to Irena Briganti, the executive vice-president of corporate communications at Fox News Channel, asking if the arrangement with Monex had changed in light of the charges was left unanswered.
The Monex advertisement
If you’ve been watching the news recently you know that volatile interest rates, risky stock, bond, and real estate markets and a crazy political landscape may lead to major uncertainty everywhere. In such an environment, the right gold and silver product may offer you a sense of comfort not available with traditional paper.
But Monex did not provide the right “gold and silver product”, according to the CFTC, which accused the company of presenting their products as safe, when in reality they were traded off-exchange, with Monex as the counterparty, enticing people with risky and costly margin accounts, referred to as Monex Atlas Accounts.
The Atlas Account continues to be featured prominently on the Monex.com website.
“Or, you may elect financing of your precious metals, using as little as a 25% down payment and taking advantage of investment leverage of as much as 4-to-1, through our exclusive Atlas Account program,” Monex states of the Atlas Account on its site.
The CFTC stated that the 4-1 margin rules violated the Dodd–Frank bill minimum for margin in off-exchange traded accounts.
The CFTC went even further, effectively calling the whole Atlas program a sham:
In an effort to induce customers to trade in its Atlas program, Monex systematically over-represents the likelihood of profit for leveraged Atlas trading, underrepresents the risk of loss, and falsely portrays the relationship between Monex and its Atlas customers as one of ‘trust.’ Among other false or material misleading claims, Monex describes the Atlas program as a way to shield wealth from inflation, but fails to disclose the significant number of customers who have had trading positions force-liquidated at a loss.
An email to Monex was left unanswered.