On September 7, the U.S. Commodity Futures Trading Commission (CFTC) issued a Notice of Covered Action (NCA) for an enforcement action taken against a New Jersey resident and his company. On September 2, the agency announced that a Federal Court had ordered Swapnil Rege and SwapStar Capital LLC to pay over $5 million to settle charges of fraudulent solicitation, misappropriation, and violation of trading prohibition.
The NCA signals that the CFTC is now accepting whistleblower award applications for the case. Through the CFTC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the agency with original information that leads to a successful enforcement action, are entitled to monetary awards of 10-30% of funds recovered by the CFTC.
The CFTC alleges that Rege and SwapStar engaged in fraudulent solicitation and misappropriation and Rege violated a prior CFTC consent order that barred him from commodity trading. According to the CFTC, Rege and Swapstar “fraudulently solicited individuals to lend or invest money based on material misrepresentations, including: that such funds would be invested; that lenders and investors would receive a fixed return, in some cases as high as 40% to 60%; and that account holders could redeem their funds immediately or on short notice.”
The CFTC also claims that Rege and Swapstar used a portion of the solicited funds to trade commodity interests in violation of the previous CFTC consent order barring Rege from doing so. Furthermore, Rege and Swapstar “misappropriated some of the solicited funds to pay for personal expenses and to pay returns to other account holders in a manner akin to a Ponzi scheme,” according to the CFTC.
Judge Zahid N. Quraishi of the U.S. District Court for the District of New Jersey ordered Rege and Swapstar to pay $4,894,225 in disgorgement and pre-judgment interest of $161,335 along with a $200,000 civil monetary penalty. The order also imposes permanent trading and registration bans against the defendants.
Individuals have until December 6, 2022 to make an award claim for the case by submitting a Form WB-APP to the CFTC Office of the Whistleblower. Whistleblower awards for the case could range from approximately $500,000 to $1.5 million.
Since issuing its first award in 2014, the CFTC has awarded approximately $330 million to qualified whistleblowers.