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INTERNATIONAL FUTURES STRATEGISTS, INC
CASE OUTCOME: EXPELLED FROM MEMBERSHIP
NFA ID:
0192218
Complaint:
ON MARCH 7, 1990, THE CENTRAL REGIONAL BUSINESS CONDUCT COMMITTEE ("CENTRAL COMMITTEE") ISSUED A COMPLAINT TO INTERNATIONAL FUTURES STRATEGISTS, INC. ("IFS"), ARTHUR JAMES BARBATO, JR. ("BARBATO"), ALAN STEVEN FLEISHMAN ("FLEISHMAN"), KENNETH WALTER FOGELBERG ("FOGELBERG"), JOSEPH EUGENE HOWARD III ("HOWARD"), PHILIP GREG MALBERG ("MALBERG"), PETER DAVID SCHIFF ("SCHIFF"), MICHAEL VINCENT UGINO ("UGINO") AND KENNETH SHELDON WEISS ("WEISS"). THE COMPLAINT ALLEGES THAT IFS, SCHIFF, UGINO AND WEISS VIOLATED NFA COMPLIANCE RULES 2-2(A), 2-29(A)(1), 2-29(B)(1) AND 2-29(B)(2) BY USING DECEPTIVE AND MISLEADING SALES SOLICITATIONS. THE COMPLAINT ALSO ALLEGES THAT FOGELBERG VIOLATED NFA COMPLIANCE RULES 2-29(B)(1) AND (B)(2) BY USING DECEPTIVE AND MISLEADING SALES SOLICITATIONS; AND THAT IFS, UGINO AND MALBERG VIOLATED NFA COMPLIANCE RULE 2-29(A)(2) BY EMPLOYING A HIGH-PRESSURE APPROACH IN TELEPHONE SALES SOLICITATIONS. THE COMPLAINT FURTHER ALLEGES THAT IFS AND MALBERG VIOLATED NFA COMPLIANCE RULE 2-30 BY FAILING TO GIVE ADEQUATE RISK DISCLOSURE TO A FUTURES CUSTOMER. ADDITIONALLY, THE COMPLAINT ALLEGES THAT IFS, WEISS AND FLEISHMAN VIOLATED NFA COMPLIANCE RULE 2-26 BY MAKING GUARANTEES TO COMMODITIES CUSTOMERS AGAINST LOSS AND PROMISING TO LIMIT THEIR LOSSES. THE COMPLAINT FURTHER ALLEGES THAT IFS, WEISS AND FOGELBERG VIOLATED NFA COMPLIANCE RULE 2-4 BY FAILING TO OBSERVE HIGH STANDARDS OF COMMERCIAL HONOR AND JUST AND EQUITABLE PRINCIPLES OF TRADE IN THE CONDUCT OF COMMODITY FUTURES BUSINESS AND THAT IFS VIOLATED NFA BYLAW 1101 BY DOING BUSINESS WITH AN ENTITY WHICH WAS REQUIRED TO BE REGISTERED AND AN NFA MEMBER BUT WHICH WAS NEITHER REGISTERED NOR AN NFA MEMBER. THE COMPLAINT ALSO ALLEGES THAT IFS, BARBATO, HOWARD AND FOGELBERG VIOLATED NFA COMPLIANCE RULES 2-29(B)(1) AND (B)(2) BY USING PROMOTIONAL MATERIAL WHICH WAS LIKELY TO DECEIVE THE PUBLIC AND WHICH CONTAINED MATERIAL MISSTATEMENTS OF FACT; THAT IFS, FOGELBERG AND SCHIFF VIOLATED NFA COMPLIANCE RULE 2-29(B)(3) BY USING PROMOTIONAL MATERIAL WHICH MENTIONED THE POSSIBILITY OF PROFIT WITHOUT BEING ACCOMPANIED BY AN EQUALLY PROMINENT STATEMENT OF THE RISK OF LOSS; AND THAT IFS VIOLATED NFA COMPLIANCE RULES 2-29(B)(4), (B)(5), (D), (E) AND (F) BY USING PROMOTIONAL MATERIAL WHICH FAILED TO INCLUDE THE REQUISITE HYPOTHETICAL DISCLAIMER; INCLUDED REFERENCE TO ACTUAL PAST TRADING PROFITS WITHOUT MENTIONING THAT PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS, CONTAINED INFORMATION WHICH COULD NOT BE SUPPORTED, WAS NOT REVIEWED PRIOR TO FIRST USE, WAS NOT MAINTAINED ON FILE AND WAS NOT SUBMITTED TO NFA PROMPTLY AFTER FIRST USE. THE COMPLAINT FURTHER ALLEGES THAT IFS VIOLATED NFA COMPLIANCE RULE 2-19 BY FAILING TO SUBMIT OPTIONS-RELATED PROMOTIONAL MATERIAL TO NFA AFTER FIRST USE, AND NFA BYLAW 301(B) AND NFA REGISTRATION RULE 205 BY FAILING TO REGISTER AS AN ASSOCIATED PERSON OR LIST AS A PRINCIPAL AN INDIVIDUAL INVOLVED IN A BRANCH OFFICE'S DAILY ACTIVITIES. THE COMPLAINT ALSO ALLEGES THAT IFS VIOLATED NFA COMPLIANCE RULE 2-9 BY FAILING TO SUPERVISE ITS APS AND BRANCH OFFICES. MANDEL D. GREEN ("GREEN") IS ALLEGED TO BE A CAUSE OF THIS VIOLATION. FINALLY, THE COMPLAINT ALLEGES THAT IFS VIOLATED NFA FINANCIAL REQUIREMENTS SECTION 9 BY FAILING TO MEET MINIMUM NET CAPITAL REQUIREMENTS, TO MAINTAIN ITS REQUISITE DEBT TO EQUITY RATIO AND TO ADHERE TO ITS EQUITY WITHDRAWAL RESTRICTION. Decision:
ON MARCH 10, 1994, A DESIGNATED PANEL OF NFA'S CENTRAL COMMITTEE ISSUED A DECISION TO IFS AFTER A HEARING WAS HELD. THE PANEL PERMANENTLY EXPELLED IFS FROM NFA MEMBERSHIP AND FOUND THAT GREEN WAS THE CAUSE OF IFS'S EXPULSION. THIS DECISION BECOMES EFFECTIVE MARCH 30, 1994.
Source: National Futures Association
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