Aggregated News From Investment Management Regulators

CFTC Charges Investment Firm and VP with Commodity Pool Fraud

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February 20, 2020

Washington, D.C. — The Commodity Futures Trading Commission today announced the filing of a civil enforcement action in the U.S. District Court for the Western District of North Carolina charging Winston Reed Investments LLC (WRI) and its vice president and investment consultant, Mark N. Pyatt a/k/a Daniel Randolph, a former North Carolina resident, with misappropriation of customer funds and fraudulent solicitation in connection with a commodity pool.

The complaint alleges that from April 2017 through February 2019, WRI and Pyatt fraudulently solicited and received approximately $200,000 from at least 19 pool participants in connection with pooled trades in commodity futures contracts and retail foreign exchange transactions, among other things.

As further alleged, WRI and Pyatt misappropriated most of pool participants’ funds for business expenses, personal use, and to make Ponzi-like payments to other pool participants.  In addition, despite incurring overall net trading losses, WRI and Pyatt sent reports to investors falsely claiming large profits of between approximately 19 and 86% per month.

In its continuing civil litigation, the CFTC seeks restitution to defrauded pool participants, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act, as charged.

Related Criminal Action

On February 20, 2020, the U.S. Attorney’s Office for the Western District of North Carolina announced a separate criminal action against Pyatt. See United States v. Pyatt, W.D.N.C. Case No. 1:20-CR-16, charging Pyatt with wire fraud, securities fraud, investment adviser fraud, and money laundering offenses.

The CFTC thanks the Denver Regional Office of the Securities and Exchange Commission and the Office of the United States Attorney for the Western District of North Carolina for their assistance in this matter.

The Division of Enforcement staff members responsible for this action are James Garcia, Michael Loconte, and Rick Glaser.

-CFTC-

Regulator Information

Abbreviation: CFTC
Jurisdiction: USA

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