How can U.S. regulators (CFTC) enforce that an offshore Fund not accept any U.S. clients? Isn't this beyond their jurisdiction? Is there an example where the CFTC has gone after an entity located outside of the US?
I'm not an expert on this, but I believe this is a tax issue, not a regulatory (CFTC, NFA or SEC) issue. If they have any USA investors, they have tax reporting to do that they would like to avoid.
US people can invest in an offshore fund but has to declare and report it in tax return as sth like passive income. Not worth of the trouble in general.
US has the largest financial system in the World they simply lock the offshore entity's custodian out of US markets thus force the offshore entity not to accept US clients IE its the leverage. That is how they forced the Swiss banks to disclose their client list. Swiss banks do so much business in the US that mere threat was enough for them to capitulate
I don't know of any CFTC example, however there is a thread where Suretrader (a Bahamas regulated broker/dealer) was required to notify the IRS of their U.S. based clients. You can read about it here: http://www.elitetrader.com/et/index.php?threads/be-careful-if-you-are-at-suretrader.288152/ This is just an example of more intrusion of private citizens. Apple, Cisco, Qualcom, etc. can have BILLIONS in offshore cash through foreign subsidiary corporations that are not legally subject to IRS tax, however if you dare open an individual 10k trading account with Suretrader, then you better report it "or else" subject yourself to the potential consequences. Alibaba, for example, the giant Chinese B2B e-commerce firm, created a Grand Cayman Islands company (Alibaba Group Holdings Limited) for the sole purpose of listing its publicly traded shares in the U.S., go figure. Of course, there is always a workaround even for an individual, such as creating an offshore entity to trade with an offshore firm if you want to keep your profits offshore. However, that requires a lot of paperwork, knowledge of offshore rules, a competent attorney and lots of upfront cash, which is not realistic for a daytrader with a small account.