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The Commodity Broker - Chapter 2 - By Milton Laene Araujo
Chapter 2 – Stonegate
Financial Services October 2006 to 2007
Stonegate Financial Services, located in Delray Beach,
Florida, was registered as an Introducing broker in October 2006. Stonegate was the lineal descendent of Futuretek
Trading Group, a boiler room operation in South Florida. When the NF A issued a
disciplinary complaint against Futuretek in 2005, many of its brokers
transferred en masse to Majestik Commodity Corporation, another firm located in
south Florida. The process was repeated when the NF A issued a disciplinary
complaint against Majestik in 2006, and many Majestik brokers transferred to
Stonegate.
Stonegate's
owners, Jose Roberto Jalil and Anthony Rodriguez, and the majority of Stonegate
' s associated persons, had been associated with a string of "tainted"
firms that had been disciplined by the CFTC and the NF A for fraudulent sales
and trading practices. When Stonegate started up in 2006, almost its entire
sales force had worked for tainted firms, most notably Futuretek and Majestic. One year later, by October 17th,
2007, when Sofia applied for an available position as an associated person
the concentration of tainted
brokers had been partially diluted, but remained high: out of 22 Stonegate
associated persons, ten were not rookies, and all ten experienced associated
persons - including Peter Zipe, Cindy Marks and Chris Spinster -- had previously worked for extensive
periods of time for
tainted firms. Stonegate steered its customers into patently dubious trading strategies
that were designed to maximize Stonegate's commission income. Although, Stonegate’s principals and brokers probably knew, or suspected,
or could have easily discovered these facts, a novice trader, such as a
customer, with no knowledge of the commodity options business -- could not have
readily known, suspected or discovered
these facts. Sofia had no idea about this what-so-ever.
On October 3, 2007
– about, fifteen days before Sofia’s entrance into the firm, the NFA brought a disciplinary complaint against
Stonegate and its president, Anthony Rodriguez, alleging that they had been allowing a suspended former principal of a
firm disciplined for boiler-room
practices –Jose Roberto’s
brother, Paul Jalil the owner of Futuretek
-- to run Stonegate.
From Paul’s immediate entrance, Stonegate agents had engaged in misleading sales
solicitations. Anthony Rodriguez became a puppet in the hands of Paul Jalil. Anthony
had failed to implement the augmented supervisory safeguards mandated by NFA rules for firms with a high percentage of tainted brokers.
Paul
Jalil, the man with all the money, was first registered with the NFA in January
2000, as an associated person and principal of a string of tainted
firms, including Group Two Financial Services, Inc., Third Liberty Investments,
Futuretek Trading Group, and Majestik Commodity Corp. In 2005, the NFA issued a
complaint against Futuretek, Paul Jalil and others, alleging that Paul Jalil had
defrauded customers and failed to supervise Futuretek. On October 16, 2006, Jalil
agreed to settle those charges by agreeing to a variety of sanctions, including
a six-month membership ban
and other restrictions on his business activities.
Notwithstanding
these restrictions, Paul Jalil had a regular and active presence at Stonegate
from the beginning, leading motivational daily sales meetings, offering trade
recommendations to prospects, and hiring and firing new brokers. Jose Roberto
Jalil, Paul's brother, was an owner and a registered associated person with Stonegate,
but his presence in this business occurred when Paul did not have anyone else
to use as his puppet. He became a registered principal of Stonegate on October
23, 2006, just as his brother was beginning his six-month suspension.
Luis
Vanderval Rodriguez, Anthony's brother, and a want-to-be-broker filed an application
for registration as an associated person with Stonegate on December 11, 2006,
which remained pending due to his background. By letter dated January 31, 2007,
the NFA had given Rodriguez the option to withdraw his application in lieu of submitting
additional documentation concerning his arrest record. He remained working for
Stonegate even without a license. He made calls, lied to clients and brought a
great sum of money to his owners.
Gerald
"Jerry" Zaipe, one of the most experienced brokers at Stonegate, was
a registered associated person from December 21, 2006. Zaipe first became registered in 2003, and worked for
a series of tainted
firms, including United Investors, Group, Futuretek Trading Group, and Majestik
Commodity Corporation. Mr. Zaipe is what we call a Loader. He received accounts
opened by other brokers and worked on those accounts to increase profit for the
business. Zaipe, along with all other senior brokers had learned the game, but they all have forgotten the human side of life.
The regular
commission charged by most introducing brokers is $100.00, which covers to
place the customer in the market and on a later date offset his contract.
Stonegate was charging $250. A process called churning also was taking place.
Senior brokers traded every day until the entire investment disappeared and a
large commission was earned.
Chapter 6 – 7 http://miltonlaenearaujo.blogspot.com/2013/08/the-commodity-broker-chapter-6-and-7.html
Chapter 8 – END http://miltonlaenearaujo.blogspot.com/2013/08/the-commodity-broker-chapter-8-end.html
