Washington, D.C. — The Commodity Futures Trading Commission today announced that Judge Zahid N. Quraishi of the U.S. District Court for the District of New Jersey entered a final judgment and consent order resolving charges against defendants Swapnil Rege (Rege) and SwapStar Capital LLC, and relief defendant Reema Rege. The order finds that the defendants engaged in fraudulent solicitation and misappropriation, and that Rege violated a prior CFTC consent order that, among other things, barred him from trading commodity interests for at least three years. The order further finds that Reema Rege received money or profits illegally obtained by the defendants, and is not legally entitled to and has no legitimate claim to such funds.
The order imposes permanent trading and registration bans against the defendants, and requires the defendants and relief defendant to pay, jointly and severally, $4,894,225 in disgorgement and pre-judgment interest of $161,335, with the relief defendant’s disgorgement obligation limited to the balances in specified accounts. In addition, the order imposes a permanent injunction prohibiting the defendants from committing further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, and imposes a $200,000 civil monetary penalty. The order resolves the CFTC’s complaint filed against the defendants and relief defendant on October 26, 2021. [See CFTC Press Release No. 8454-21]
“This Order reflects the CFTC’s continued commitment to ensuring that wrongdoers are held fully accountable for their misconduct, including for violating a prior consent order,” said CFTC Acting Director of Enforcement Gretchen Lowe. “The CFTC will continue to work with its regulatory enforcement partners where the misconduct stretches across markets and regulatory jurisdictions.”
Case Background
The order finds the defendants fraudulently solicited individuals to lend or invest money based on material misrepresentations, including: that such funds would be invested; that lenders and investors would receive a fixed return, in some cases as high as 40% to 60%; and that account holders could redeem their funds immediately or on short notice. The order further finds the defendants then used a portion of the solicited funds to trade commodity interests through accounts they owned, or accounts that were nominally owned by Rege’s spouse, Reema Rege, but controlled by Rege. The order also finds the defendants misappropriated some of the solicited funds to pay for personal expenses and to pay returns to other account holders in a manner akin to a Ponzi scheme. In addition, the order finds that Rege failed to disclose he was barred for at least three years from trading any commodity interests under the prior CFTC consent order. The order further finds that Rege violated the prior CFTC consent order by continuing to trade commodity interests on or subject to the rules of any registered entity during the three years he was prohibited from doing so.
The CFTC cautions that orders requiring repayment of funds to victims may not always result in the recovery of lost money because the wrongdoers may not have sufficient funds or assets.
Parallel Civil Action
In a parallel, separate matter, the Securities and Exchange Commission (SEC) previously announced that the U.S. District Court for the District of New Jersey entered final judgments on consent against defendants Swapnil J. Rege and SwapStar Capital LLC and relief defendant Reema Rege, to resolve parallel charges in violation of federal securities laws. SEC v. Rege, No. 3: 21-cv-19313-ZNQ-TQB (D.N.J. filed Oct. 26, 2021).
The CFTC thanks and acknowledges the assistance of the SEC and the New Jersey Bureau of Securities.
The Division of Enforcement staff responsible for this matter are Trevor Kokal, Benjamin J. Rankin, Patryk J. Chudy, Lenel Hickson, Jr., and Manal M. Sultan.
The CFTC strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that company. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.
Source: CFTC
