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EINSTEIN CISVEST INC
CASE OUTCOME: CTA REGISTRATION REVOKED
• MAY NOT APPLY TO REGISTER
NFA ID:
0194816
Overview:
For Release: December 23, 1993 PERMANENT INJUNCTIONS ENTERED AGAINST JAYSON KLINE, EINSTEIN- CISVEST, MEL SILVERS & JOSEPH CUNNINGHAM IN BACHUS/STRATTON CASE CFTC Also Files & Settles Separate Administrative Actions Against the Defendants WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that U.S. District Court Judge James C. Paine of the Southern District of Florida entered orders of permanent injunction against Jayson S. Kline of Boca Raton, Fla., a former principal of Bachus & Stratton Commodities, Inc. (BSCI), which was a futures commission merchant and a commodity pool operator in Pompano Beach, Florida; Einstein-Cisvest, Inc., of Miami, Fla., a registered commodity trading advisor (CTA); Mel Silvers, of North Miami, Fla., who was formerly a registered associated person (AP) at BSCI and is the owner and a principal of Einstein-Cisvest; and Joseph M. Cunningham, of Coral Springs, Fla., a former AP, vice president, and sales director of BSCI. A consent preliminary injunction was entered against Kline on May 28, 1992, and against Einstein-Cisvest and Silvers on June 23, 1992. The court's injunctive orders, which were entered November 16, 1993, permanently enjoin Kline, Einstein-Cisvest, and Silvers from violating the anti-fraud provisions of the Commodity Exchange Act (CEA) and the CFTC regulations as alleged in the complaint. The orders also permanently enjoin Kline, Einstein, and Silvers -- neither of whom admitted nor denied the allegations -- from cheating, defrauding, or deceiving any person by making false, deceptive, or misleading statements and by omitting material facts during the course of soliciting commodity futures and options customers. Kline and Cunningham are also enjoined from violating the Commission's supervisory regulation. The order against Cunningham, who neither admitted nor denied the allegations, was entered on December 8, 1993. The court action stems from a four-count civil complaint filed by the CFTC on May 5, 1992 (CFTC Release #3500-92) against Kline; Silvers; Einstein-Cisvest (doing business as Einstein Futures Group, Inc.); Cunningham; BSCI; and Richard Stratton Love, of Sunshine, Fla., president and owner of BSCI. In July 1992, BSCI went out of business and has not solicited anyone since that date. On October 18, 1993, a permanent injunction was entered against BSCI and Love, both of whom also settled a CFTC administrative complaint against them on October 21, 1993 (CFTC News Release #3714-93). In its civil complaint, the CFTC alleged that BSCI, Love, Kline and Cunningham misrepresented the likelihood of profit in trading commodity futures contracts and options, the risk of loss in trading commodity futures and options, and BSCI's success rate and its experience and research capabilities and that of its trading advisor. The CFTC also charged the defendants with churning customer accounts. All the defendants were also charged with using false and misleading promotional materials and advertisements related to the Einstein managed account program, and BSCI, Love, Kline and Cunningham were charged with failing to supervise diligently the handling of commodity accounts by BSCI's salespeople. In its complaint, the CFTC alleged that 97 percent of customers of BSCI lost all or substantially all of their equity to trading losses and commissions, which aggregated to approximately $12.4 million, of which at least $5.9 million was commission income. Defendants Also Agree to Settle Separate CFTC Administrative Actions The CFTC also announced today that on December 9, 1993, it filed a four-count administrative complaint against Kline, charging him with the same fraudulent conduct as alleged in the injunctive complaint, and a two-count complaint against Einstein-Cisvest and Silvers, charging them with churning and fraud in connection with the solicitation and trading of customers' accounts in the Einstein managed account program. Also on December 9, the CFTC filed a two- count complaint against Cunningham, charging him with fraud in the solicitation of customers for the Einstein managed account program and with failing to supervise diligently the handling of commodity accounts by BSCI's salespeople. On the same day the complaints were filed, the CFTC accepted offers of settlement under which Kline, Einstein-Cisvest, Silvers, and Cunningham, without admitting or denying the allegations, agreed to findings that they violated the anti-fraud provisions of the CEA and CFTC regulations, as charged in the respective complaints, and agreed to cease and desist from further such violations. Kline and Cunningham had findings and a cease and desist order entered against them on the failure to supervise count. Furthermore, Kline, Einstein-Cisvest, Silvers, and Cunningham agreed never to seek registration with the CFTC in any capacity, or act in any capacity, that requires registration with the CFTC -- which effectively bars them from the regulated futures industry. In addition, Silver's registration as an AP and Einstein-Cisvet's registration as a CTA were revoked. CFTC Settlement Bars Defendants from the Futures Industry With the entry of these orders of permanent injunction and the three CFTC administrative cases and orders, the matter has been settled against all the defendants, all of whom, in addition to having permanent injunctions entered against them, have had all their registrations revoked and/ or have undertaken never to apply to the CFTC in any capacity and never to act in any capacity that requires registration.
Source: National Futures Association
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