Reallocation of profits and other strange activities
A reviewer left a review on July 12th 2009 about some NFA issues with CFS Capital Management. One of the review moderators sent it over to the Scam Investigations Committee. At first, our investigators weren't sure how serious it was. The NFA has such stringent reporting requirements that it is easy to end up with all sorts of charges due to small technicalities. Then they read the NFA Case Documents.
On June 30th, 2009, the NFA's Business Conduct Committee has issued an extensive complaint against CFS Capital Management LLC ("CFS"), Brian G. Elrod ("Brian Elrod") and Andrew G. Elrod ("Andrew Elrod"). It's an 18 page document.
The list of NFA accusations was almost beyond belief. Some of them include...
Transferring money from profitable customer accounts to accounts that were losing money to cover up losses. This was called reallocation.
Promising that some money would be protected by being invested in treasury bonds and taking as much as 8 months to purchase these. In some cases, the customer account had lost so much that they would not have been able to buy the government bonds without the “reallocation” of money between accounts belonging to different customers.
Raising incentive fees on profits without providing contractually required notice.
Taking over a year to refund improper incentive fees.
Providing seriously misleading sales material to prospective customers in both paper copies and on the company website.
Falsely claiming that the NFA had approved its trading program. The NFA does not approve trading programs.
Providing incorrect information to the NFA when questioned about company activities.
CFS Capital does have 30 days to respond the the complaint. Considering the severity and number of issues the NFA brought up, the FPA Scam Investigations Committee decided that warning FPA members to avoid this company now was the best course of action.
If you do have money with CFS Capital, we urge you to contact the NFA and discuss your options with them.
We wish to thank FPA Reviewer Robert M of Arizona and the FPA's Review Moderation Team for their contributions to this case.
Official Scam finding against CFSCap
NFA Case Summary
NFA Case Document
FPA Review Page for CFSCap.com
A copy of the Case Document is attached. You will need to be logged into your personal FPA Forums Account to view the attachment.
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