CFTC Charges Ireland-based âPrediction Marketâ Proprietors Intrade and TEN with Violating the CFTCâs Off-Exchange Options Trading Ban and Filing False Forms with the CFTC
Washington, DC â The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil complaint in federal district court in Washington, DC, charging Intrade The Prediction Market Limited (Intrade) and Trade Exchange Network Limited (TEN), Irish companies based in Dublin, Ireland, with offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers, all in violation of the CFTCâs ban on off-exchange options trading. The CFTCâs complaint also charges Intrade and TEN with making false statements concerning their options trading website in documents filed with the CFTC, and charges TEN with violating a 2005 CFTC cease and desist order (see CFTC Press Release 5124-05, October 4, 2005).
Intrade and TEN jointly operate an online âprediction marketâ trading website, through which customers buy or sell binary options which allow them to predict (âyesâ or ânoâ) whether a specific future event will occur, according to the CFTCâs complaint.
Specifically, according to the complaint, from September 2007 to June 25, 2012, Intrade and TEN operated an online âprediction marketâ trading website, which allowed U.S. customers to trade options products prohibited by the CFTCâs ban on off-exchange options trading. Through the website, Intrade and TEN allegedly unlawfully solicited and permitted U.S. customers to buy and sell options predicting whether specific future events would occur, including whether certain U.S. economic numbers or the prices of gold and currencies would reach a certain level by a certain future date, and whether specific acts of war would occur by a certain future date.
The CFTCâs complaint also charges Intrade and TEN with knowingly filing false âAnnual Certificationâ forms with the CFTC stating that Intrade limited its options offerings to eligible market participants. Contrary to these representations, the complaint alleges that Intrade unlawfully solicited and permitted retail U.S. customers to buy and sell off-exchange options on the website.
In addition, the complaint alleges that TEN violated an order issued by the CFTC in 2005 that found that TEN had previously engaged in similar conduct and ordered TEN to cease and desist from violating the Commodity Exchange Act and CFTC regulations, as charged.
David Meister, the Director of the CFTCâs Division of Enforcement, stated: âIt is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called âpredictionâ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt. The requirement for on-exchange trading is important for a number of reasons, including that it enables the CFTC to police market activity and protect market integrity. Todayâs action should make it clear that we will intervene in the âpredictionâ markets, wherever they may be based, when their U.S. activities violate the Commodity Exchange Act or the CFTCâs regulations.â
In its continuing litigation the CFTC seeks civil monetary penalties, disgorgement of ill-gotten gains, and permanent injunctions against further violations of federal commodities law, as charged, among other relief.
The CFTC acknowledges the Central Bank of Ireland for its assistance in the CFTCâs investigation of Intrade and TEN.
http://www.cftc.gov/PressRoom/PressReleases/pr6423-12
Washington, DC â The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil complaint in federal district court in Washington, DC, charging Intrade The Prediction Market Limited (Intrade) and Trade Exchange Network Limited (TEN), Irish companies based in Dublin, Ireland, with offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers, all in violation of the CFTCâs ban on off-exchange options trading. The CFTCâs complaint also charges Intrade and TEN with making false statements concerning their options trading website in documents filed with the CFTC, and charges TEN with violating a 2005 CFTC cease and desist order (see CFTC Press Release 5124-05, October 4, 2005).
Intrade and TEN jointly operate an online âprediction marketâ trading website, through which customers buy or sell binary options which allow them to predict (âyesâ or ânoâ) whether a specific future event will occur, according to the CFTCâs complaint.
Specifically, according to the complaint, from September 2007 to June 25, 2012, Intrade and TEN operated an online âprediction marketâ trading website, which allowed U.S. customers to trade options products prohibited by the CFTCâs ban on off-exchange options trading. Through the website, Intrade and TEN allegedly unlawfully solicited and permitted U.S. customers to buy and sell options predicting whether specific future events would occur, including whether certain U.S. economic numbers or the prices of gold and currencies would reach a certain level by a certain future date, and whether specific acts of war would occur by a certain future date.
The CFTCâs complaint also charges Intrade and TEN with knowingly filing false âAnnual Certificationâ forms with the CFTC stating that Intrade limited its options offerings to eligible market participants. Contrary to these representations, the complaint alleges that Intrade unlawfully solicited and permitted retail U.S. customers to buy and sell off-exchange options on the website.
In addition, the complaint alleges that TEN violated an order issued by the CFTC in 2005 that found that TEN had previously engaged in similar conduct and ordered TEN to cease and desist from violating the Commodity Exchange Act and CFTC regulations, as charged.
David Meister, the Director of the CFTCâs Division of Enforcement, stated: âIt is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called âpredictionâ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt. The requirement for on-exchange trading is important for a number of reasons, including that it enables the CFTC to police market activity and protect market integrity. Todayâs action should make it clear that we will intervene in the âpredictionâ markets, wherever they may be based, when their U.S. activities violate the Commodity Exchange Act or the CFTCâs regulations.â
In its continuing litigation the CFTC seeks civil monetary penalties, disgorgement of ill-gotten gains, and permanent injunctions against further violations of federal commodities law, as charged, among other relief.
The CFTC acknowledges the Central Bank of Ireland for its assistance in the CFTCâs investigation of Intrade and TEN.
http://www.cftc.gov/PressRoom/PressReleases/pr6423-12
