In expanding their enforcement Web site today, regulators with the Commodity Futures Trading Commission are relying on the Internet to monitor rogue trading advisers and catch white-collar criminals.
The regulators, who are chasing a man alleged to have embezzled $3 million from investors involved in his unregistered commodity pool, posted a Web page featuring his personal assets, which are slated to be auctioned off this weekend.
The auction page, featuring such goodies as antique furniture and Oriental rugs, adds to the "wanted" page the trading commission posted in October on Donald B. Chancey. That page marked the first time the commission had use the Internet to solicit tips on the whereabouts of an individual under investigation.
Chancey is alleged to have bilked investors with his commodity pool, called Southeastern Venture Partners Group, and has been on the lam since May, according to investigators. Trading officials filed a six-count civil complaint against the pool operator in July, and he is currently being sought by the U.S. Marshals.
Several months ago, the commission initiated for the first time enforcement action against two unregistered trading advisers who operated over the Internet.
The agency ordered Steven Marks of Ocala, Florida, and J. Spencer Brown of Fort Worth, Texas, to halt their operations. Under an agreement, the trading advisors agreed to register with the trading commission and provide customers with mandatory disclosure documents.
"As the Internet increasingly becomes a medium for the exchange of information and activity falling within the CFTC's jurisdiction, our Internet Surveillance program will become an increasingly important part of our efforts to enforce the law and protect the public," Geoffrey Aronow, enforcement director, said in a statement.
The regulatory agency has an Internet surveillance program that monitors home pages, newsgroups, bulletin boards, and chat rooms on the Web. The program has yielded dozens of initial referrals used by the agency's enforcement division on such issues as possible misrepresentation of success of some trading programs and potentially illegal investment products.
But despite those moves, the regulatory agency recently set aside plans to require traders to register with the agency when filing documents via the Internet. Commodity pool operators and trading advisers, looking to cut the cost of mailing documents to potential customers, want to submit the documents online.
The commission was considering requiring pool operators and trading advisers who were interested in sending customers informational documents over the Net to first transmit disclosure material before the documents could be downloaded.
The investment community complained it wasn't a fair playing field in that customers meeting with pool operators and trading advisors did not have to review the disclosure information before viewing the requested documents.