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CASTLE COMMODITIES CORPORATION
CASE OUTCOME: PERMANENT WITHDRAWAL FROM NFA MEMBERSHIP
NFA ID:
0217352
Individuals Involved:
- MINOGUE INVESTMENT CO INC CTA
- DENNIS JOSEPH MINOGUE
- MURAJI NAKAZAWA
ON OCTOBER 16, 1996, NFA'S BUSINESS CONDUCT COMMITTEE ("BCC") ISSUED A COMPLAINT TO MINOGUE INVESTMENT COMPANY, INC. ("MIC, INC."), DENNIS J. MINOGUE ("MINOGUE"), CASTLE COMMODITIES CORPORATION ("CASTLE"), AND MURAJI NAKAZAWA ("NAKAZAWA"). THE COMPLAINT ALLEGED THAT MINOGUE, MIC, INC., NAKAZAWA AND CASTLE USED DECEPTIVE, MISLEADING, AND UNBALANCED PROMOTIONAL MATERIAL, IN VIOLATION OF NFA COMPLIANCE RULES 2-2(a), 2-29(b)(1), and 2-29(b)(2). THE COMPLAINT ALSO ALLEGED THAT MINOGUE AND MIC, INC. USED PROMOTIONAL MATERIAL WHICH FAILED TO CLEARLY IDENTIFY PERFORMANCE RESULTS AS HYPOTHETICAL AND FAILED TO INCLUDE THE REQUIRED RESULTS, IN VIOLATION OF NFA COMPLIANCE RULE 2-29(b)(3) and 2-29(b)(4). IN ADDITION, THE COMPLAINT ALLEGED THAT MIC, INC. AND CASTLE USED A DISCLOSURE DOCUMENT THAT OMITTED MATERIAL INFORMATION CONCERNING MIC, INC.'S PRINCIPALS AND FAILED TO MAINTAIN ADEQUATE SUPPORTING DOCUMENTS TO SHOW HOW PERFORMANCE TABLES WERE PREPARED AND RATES OF RETURN WERE CALCULATED, IN VIOLATION OF NFA COMPLIANCE RULE 2-13. Decision:
DECISION - CASTLE COMMODITIES CORPORATION AND MURAJI NAKAZAWA ON SEPTEMBER 16, 1997, NFA'S BCC ISSUED A DECISION ACCEPTING CASTLE'S AND NAKAZAWA'S SETTLEMENT OFFER IN WHICH THEY NEITHER ADMITTED NOR DENIED THE ALLEGATIONS OF THE COMPLAINT. THE BCC ORDERED CASTLE TO PERMANENTLY WITHDRAW FROM NFA MEMBERSHIP AND NEVER REAPPLY FOR NFA MEMBERSHIP IN ANY CAPACITY. THE BCC ORDERED NAKAZAWA TO WITHDRAW AS AN NFA ASSOCIATE AND BE BARRED FROM APPLYING FOR NFA MEMBERSHIP OR ASSOCIATE MEMBERSHIP FOR A PERIOD OF SIX MONTHS. THE BCC ALSO ORDERED THAT NAKAZAWA BE BARRED FROM ACTING AS A PRINCIPAL OR SUPERVISING ANY NFA MEMBER OR ASSOCIATE FOR A PERIOD OF FIVE YEARS. FINALLY, THE BCC ORDERED THAT NAKAZAWA BE REQUIRED TO CAUSE ANY MEMBER SPONSORING HIM AS AN ASSOCIATE TO AGREE IN WRITING THAT FOR A PERIOD OF TWE YEARS IT WILL PERFORM ENHANCED SUPERVISORY UNDERTAKINGS PURSUANT TO AN SSCS ACCEPTABLE TO NFA. THIS DECISION BECOMES EFFECTIVE ON OCTOBER 1, 1997. DECISION - MINOGUE INVESTMENT COMPANY, INC. & DENNIS J. MINOGUE ON JUNE 25, 1998, A DESIGNATED PANEL OF NFA'S HEARING COMMITTEE ISSUED A DECISION TO MIC, INC. AND MINOGUE AFTER A HEARING WAS HELD. AFTER CONSIDERING ALL OF THE RELEVANT TESTIMONY AND DOCUMENTARY EVIDENCE PRESENTED AT THE HEARING, THE PANEL FOUND THAT MIC, INC. AND MINOGUE VIOLATED NFA COMPLIANCE RULES 2-29(b)(1), 2-29(b)(2), AND 2-29(b)(3). THE HEARING PANEL ALSO FOUND THAT MIC, INC. AND MINOGUE VIOLATED NFA COMPLAINCE RULE 2-29(b)(4) AS IN EFFECT IN 1995. IN ADDITION, THE HEARING PANEL FOUND THAT MIC, INC. VIOLATED NFA COMPLIANCE RULE 2-13. MOREOVER, THE HEARING PANEL FOUND THAT MIC, INC.'S AND MINOGUE'S CONDUCT WAS INCONSISTENT WITH JUST AND EQUITABLE PRINCIPLES OF TRADE. AS A RESULT OF ITS FINDINGS, THE HEARING PANEL ORDERED MIC, INC. AND MINOGUE TO PAY, JOINTLY AND SEVERALLY, A $35,000.00 FINE. THE HEARING PANEL ALSO IMPOSED THE FOLLOWING CONDITIONS ON THE ACTIVITIES OF MIC, INC. AND ANY FIRM OF WHICH MINOGUE IS PRINCIPAL. SPECIFICALLY, FOR A PERIOD OF TWO YEARS, MIC, INC. (AND ANY OTHER FIRM OF WHICH MINOGUE IS A PRINCIPAL) MUST FILE ALL OF ITS PROMOTIONAL MATERIALS WITH NFA AT LEAST TEN DAYS PRIOR TO ITS FIRST USE. IN ADDITION, EACH OF MIC INC.'S DISCLOSURE DOCUMENTS (AND THE DISCLOSURE DOCUMENTS OF ANY OTHER FIRM OF WHICH MINOGUE IS A PRINCIPAL) MUST BE REVIEWED AND APPROVED BY AN INDEPENDENT CONSULTANT ACCEPTABLE TO NFA. FURTHERMORE, THE HEARING PANEL ORDERED MINOGUE TO TAKE A FOUR HOUR ETHICS COURSE NO LATER THAN SIXTY DAYS AFTER THE EFFECTIVE DATE OF THE DECISION. THIS DECISION IS EFFECTIVE JULY 10, 1998. NOTICE OF APPEAL - MINOGUE INVESTMENT COMPANY AND DENNIS J. MINOGUE ON JULY 9, 1998, MIC AND MINOGUE FILED A NOTICE OF APPEAL OF THE HEARING PANEL'S DECISION WITH NFA'S APPEALS COMMITTEE. IN THEIR APPEAL, MIC AND MINOGUE REQUEST THAT THE APPEALS COMMITTEE REDUCE THE $35,000 FINE LEVIED BY NFA'S HEARING PANEL; MIC AND MINOGUE DO NOT CONTEST THE PANEL'S FINDINGS OF VIOLATIONS, OR ANY OF THE OTHER SANCTIONS IMPOSED ON MIC AND MINOGUE. DECISION -- MINOGUE INVESTMENT CO. AND DENNIS MINOGUE ON MAY 26, 1999, NFA'S APPEALS COMMITTEE ISSUED A DECISION AFFIRMING THE $35,000 FINE LEVIED ON THE APPELLANTS BY NFA'S HEARING PANEL. THIS DECISION BECOMES EFFECTIVE ON JUNE 25, 1999. ORDER - MINOGUE INVESTMENT CO. AND DENNIS MINOGUE On February 1, 2000, the CFTC issued an Order Pursuant to Delegated Authority in CFTC Docket No. CRAA-99-4, granting MIC and Minogue's motion to withdraw their appeal from the final decision of NFA. MIC and Minogue's appeal was dismissed effective February 1, 2000.
Source: National Futures Association
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