Commodity Pool Fraud

A common form of commodities fraud involves something called a commodity pool. A commodity pool is an arrangement where an individual or organization collects money from multiple investors and "pools" it together to invest in commodities and futures. Misconduct related to commodity pool fraud occurs in three main forms:

Misappropriation of Funds - Misappropriation occurs when the commodity pool operator does not invest the collected funds in commodities or futures, but instead spends it on other things (such as deposits into his own account).

Misrepresentation - Commodity pools are often promoted as offering high returns and little or no risk, in spite of the fact that commodities and futures trading is inherently volatile and risky.

Operating Without Registering - Commodity pool operators are required to be registered through the National Futures Association. Operators of small pools (less than 15 investors and $200,000 in assets) are not required to register, but they must disclose to investors that they operate without registration.

Do You Need a Commodity Pool Fraud Attorney?

Commodity pools are regulated by the Commodity Future Trading Commission. Investors who have fallen victim to commodity pool fraud can try to recover losses through the CFTC Reparations Program. Investors can choose to represent themselves, or may be represented by an attorney. The CFTC, however, warns investors that neither the judge in a reparations hearing, nor any member of the CFTC staff, will investigate or litigate on behalf of any individual investor. The laws and regulations governing commodities fraud can be complicated. You may need an attorney to ensure that your interests and legal rights are protected.

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