OSC seeks cease trade in forex fraud case

Ontario’s Capital Markets Tribunal will hold a hearing next week to consider extending a temporary order against the operators of an alleged US$300-million Ponzi scheme.

A hearing has been set for Sept. 13 to consider an application from the Ontario Securities Commission (OSC) to extend a cease trade order issued by the OSC on Aug. 29 against Traders Global Group Inc. and its principal, Muhammad Murtuza Kazmi, amid allegations that they violated securities law by defrauding investors and trading without registration or a prospectus.

Those allegations have not been proven.

According to regulatory filings, the OSC launched an investigation into Ontario-based TGG and Kazmi, in response to a request from the U.S. Commodities Futures Trading Commission (CFTC), which found that they operated a website, myforexfunds.com, claiming to be a retail foreign exchange and commodities trading firm.

“There is virtually no real trading taking place at TGG. For the vast majority of investors, trading is simulated by TGG with various rules in place designed to benefit TGG to the detriment of investors,” the OSC alleged in its application.

According to regulators, the scheme has allegedly raised around US$300 million from investors around the world, which has been used “to pay simulated ‘profits’ to other investors and for Kazmi’s personal expenses.”

Separately, the CFTC filed a complaint in the U.S. district court for New Jersey against Kazmi, TGG and a related U.S. company, Traders Global Group Inc., charging them with “fraudulently soliciting customers to trade leveraged, margined, or financed retail foreign exchange (retail forex), and leveraged retail commodity transactions.”

Those allegations haven’t been proven either.

On Aug. 29, a judge granted a statutory restraining order freezing their assets, appointing a temporary receiver, and requiring the defendants to submit their books and records to the CFTC.

A hearing on the CFTC’s motion for a preliminary injunction is scheduled for Sept. 11.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.