CFTC Charges Chicago Commodity Pool Operators, Owner, and Former Chief Portfolio Manager with Fraud and Supervision Failures
Former Chief Risk Officer Settles Fraud Charge
Washington, DC (STL.News) The Commodity Futures Trading Commission today announced filing charges in federal court against Chicago commodity pool operators (CPOs) LJM Partners Ltd and LJM Funds Management Ltd, (collectively LJM), their Chairman, owner, and registered associated person (AP) Anthony J. Caine of Colorado and Chief Portfolio Manager Anish Parvataneni of Illinois with commodity pool fraud and fraud in connection with options on futures contracts for false or misleading statements about worst-case losses, risk management, and LJM’s risk profile.
The complaint also charges LJM and Caine for failing to diligently supervise their employees and agents. According to the complaint, in January 2018, LJM had over $1 billion in assets under management, but on February 5 and 6, 2018, LJM’s portfolios suffered large trading losses (over 80%) when the Chicago Board Options Exchange’s Volatility Index (VIX) spiked over 20 points and, shortly thereafter, LJM closed its business.
The CFTC today also issued an order filing and settling fraud charges against LJM’s former Chief Risk Officer and registered AP of LJM, Arjuna Ariathurai and requiring him to pay a civil monetary penalty of $150,000, disgorgement of $83,333, along with pre-judgment interest of $14,111, and to cease and desist from further violations.