CFTC Charges Former Registrant with Making False and Misleading Statements During a CFTC Investigation


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CFTC Charges Former Registrant with Making False and Misleading Statements During a CFTC Investigation

October 9, 2019

CFTCWashington, DCThe U.S. Commodity Futures Trading Commission today issued an order filing and settling charges against Rafael Novales for making false and misleading statements of material fact to CFTC staff during an CFTC investigation by the agency’s Division of Enforcement

“As this enforcement action shows, the Commission will hold accountable individuals who make false or misleading statements to our investigators,” said CFTC Enforcement Director James McDonald.  “We take this very seriously because it undermines our efforts to help ensure the

James McDonald, CFTC’s Director of the Division of Enforcement
James McDonald, CFTC’s Director of the Division of Enforcement

integrity of the markets we regulate. When questioned by the CFTC in an interview or in sworn testimony, witnesses need to tell the truth.”

According to the order, Novales, a then-registered associated person for a registered introducing broker (IB) was interviewed by Commission staff in April 2018.  The interview was part of an ongoing Commission investigation in connection with his employment at the registered IB.  During that interview Novales knowingly made false and misleading statements that he always spoke with and obtained specific authorization from certain customers of the IB to execute orders on their behalf prior to order execution.  Subsequently, however, during sworn testimony before the Commission, Novales admitted that on at least some occasions he simply left voicemail messages for the customers informing them of the terms of the transactions and that, after leaving the voicemail messages, the IB would execute the orders on their behalf without obtaining the customers’ specific authorization.

The order imposes a $50,000 civil monetary penalty and compliance with certain undertakings, including that Novales is prohibited for a period of five years from seeking registration, claiming exemption from registration, or acting in any capacity requiring registration.

The CFTC Division of Enforcement staff members responsible for this case are James Deacon, Kara Mucha, Kevin Samuel, James H. Holl III and Rick Glaser.

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