Feds Charge Intrade With Illegally Allowing Bets
The CFTC oversees markets for futures and options, investments that allow people to bet on the future prices of commodities like grain and oil. Those contracts help farms, airlines and other businesses to protect themselves against unexpected price swings.
In the complaint, the CFTC alleged that Intrade, based in Ireland, had illegally solicited everyday U.S. investors to use the website between September 2007 and June 25 of this year.
Intrade and its operator, Trade Exchange Network Ltd., falsely claimed in annual reports that the contracts were not being sold to ordinary U.S. customers, the CFTC said. Regulators want the companies to pay fines and return profits that were obtained illegally. They want the site and its operators barred from any future activities related to options trading.
Intrade users reported on Twitter that the site already blocks them from trading contracts related to the prices of oil and gold.One of them, Joe Schilling, posted an image of an email he said was sent by Intrade in 2009, stating that crude oil and gold contracts were unavailable to U.S. users "due to a regulatory request" from the CFTC. TEN settled similar charges of soliciting U.S. investors in 2005. In an order filed with that settlement, the CFTC said that U.S. customers accounted for up to 40 percent of Intrade's total customer base. TEN paid $150,000 and agreed to halt further violations. Under the settlement, TEN agreed to use pop-up windows to tell U.S. customers which bets were not available to them. It said it would cooperate in any future investigations. Monday's complaint includes charges that TEN violated that earlier settlement. The company used Intrade to offer illegal options including on the future prices of gold, changes in the unemployment rate and a measure of U.S. economic output, the complaint said. It said TEN failed to provide the pop-up notices mandated in the 2005 order. ___ Daniel Wagner can be reached at www.twitter.com/wagnerreports.
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