CFTC $1mn Hedge Fund Ponzi

• Charges against Kevin Whylie, Matthew Zecchini, hedge fund, Algointeractive.

Alleged Violation

• Defendants charged with fraudulent solicitation and misappropriation of funds.
• Made false claims in solicitations, to current and prospective pool participants.
• Misrepresented experience and that all or most of participants’ funds would be
  invested in, among other things, futures contracts, for the participants’ benefit.
• Defendants made and issued false documents on monthly account statements.
• Only fraction of funds solicited, were ever deposited in futures trading account.
• $59.4k has been returned to participants including via early Ponzi repayments.
• Orders find that the commodity pool was not operated as separate legal entity.

Settlement

• Whylie will pay a $100k civil monetary penalty, and the default order requires
  Zecchini and Algointeractive to pay, jointly and severally, a $721k civil penalty.
• $240k restitution to participants and permanent trading and registration bans.