Intrade troubles with the CFTC

Discussion in 'Wall St. News' started by marketsurfer, Nov 26, 2012.


    CFTC Charges Ireland-based “Prediction Market” Proprietors Intrade and TEN with Violating the CFTC’s Off-Exchange Options Trading Ban and Filing False Forms with the CFTC

    CFTC also charges TEN with violating a 2005 CFTC cease and desist order

    Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil complaint in federal district court in Washington, DC, charging Intrade The Prediction Market Limited (Intrade) and Trade Exchange Network Limited (TEN), Irish companies based in Dublin, Ireland, with offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers, all in violation of the CFTC’s ban on off-exchange options trading. The CFTC’s complaint also charges Intrade and TEN with making false statements concerning their options trading website in documents filed with the CFTC, and charges TEN with violating a 2005 CFTC cease and desist order (see CFTC Press Release 5124-05, October 4, 2005).

    Intrade and TEN jointly operate an online “prediction market” trading website, through which customers buy or sell binary options which allow them to predict (“yes” or “no”) whether a specific future event will occur, according to the CFTC’s complaint.

    Specifically, according to the complaint, from September 2007 to June 25, 2012, Intrade and TEN operated an online “prediction market” trading website, which allowed U.S. customers to trade options products prohibited by the CFTC’s ban on off-exchange options trading. Through the website, Intrade and TEN allegedly unlawfully solicited and permitted U.S. customers to buy and sell options predicting whether specific future events would occur, including whether certain U.S. economic numbers or the prices of gold and currencies would reach a certain level by a certain future date, and whether specific acts of war would occur by a certain future date.

    The CFTC’s complaint also charges Intrade and TEN with knowingly filing false “Annual Certification” forms with the CFTC stating that Intrade limited its options offerings to eligible market participants. Contrary to these representations, the complaint alleges that Intrade unlawfully solicited and permitted retail U.S. customers to buy and sell off-exchange options on the website.

    In addition, the complaint alleges that TEN violated an order issued by the CFTC in 2005 that found that TEN had previously engaged in similar conduct and ordered TEN to cease and desist from violating the Commodity Exchange Act and CFTC regulations, as charged.

    David Meister, the Director of the CFTC’s Division of Enforcement, stated: “It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called ‘prediction’ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt. The requirement for on-exchange trading is important for a number of reasons, including that it enables the CFTC to police market activity and protect market integrity. Today’s action should make it clear that we will intervene in the ‘prediction’ markets, wherever they may be based, when their U.S. activities violate the Commodity Exchange Act or the CFTC’s regulations.”

    In its continuing litigation the CFTC seeks civil monetary penalties, disgorgement of ill-gotten gains, and permanent injunctions against further violations of federal commodities law, as charged, among other relief.

    The CFTC acknowledges the Central Bank of Ireland for its assistance in the CFTC’s investigation of Intrade and TEN.

    CFTC Division of Enforcement staff members responsible for this case are Kathleen Banar, David Slovick, Jessica Harris, Erica Bodin, Girum Tesfaye, Elizabeth Padgett, Rick Glaser, and Richard Wagner.

    Media Contacts
    Dennis Holden
  2. No one was harmed by InTrade, unlike half a dozen defaulting futures brokerages, and this is the best the CFTC can find to investigate?
  3. TraDaToR


    So true...
  4. ktm


    I always wondered how they got away with the financial market prediction stuff.

    Although the Intrade market isn't deep at all, you could arb it against US options and certainly make a few bucks. I was always hesitant to go down that road, and now I guess I know why.
  5. I like how regulators make an example out of Martha Stewart but Corzine runs free.

    Online poker, now intrade... so f*cking stupid.

    Meanwhile the SEC is hard at work beating off on their lunch break.
  6. Pekelo


    Gold and oil were prohibited for US costumers. They could trade the Dow though....
  7. WS_MJH


    And we have to pay big money for these fools. From what I remember reading, SEC etc employees routinely make six figures.
  8. brad10


    Such a shame. I have an account with them and had a lot of fun with the Presidential election. They shut down us little guys with $500 in our accounts and then miss Madoff and MF!