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Tuesday, February 7, 2023

Fraud Charges Against Gary Wang

Former FBG Capital employee Caroline Ellison has been charged by the CFTC with fraudulently misrepresenting client funds. The charges are the latest development in an ongoing legal battle between FBG Capital and Ellison.

Ellison, who is accused of stealing $5 million in client money to cover her own losses at the firm, was ordered to pay restitution in an earlier settlement deal with the CFTC. However, she allegedly failed to comply with those terms and continues to hide assets from authorities. The charges are the latest development in an ongoing legal battle between FBG Capital and Caroline Ellison over allegations of embezzlement and insider trading.

Fraud Charges Looms Large

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An options contract is an agreement between two parties to buy or sell an asset at a specified price on or before a future date.

An off-exchange options transaction occurs when one party buys or sells an option without going through a regulated exchange. It’s illegal because these transactions can be easily manipulated by fraudsters and don’t benefit from the protections of regulated exchanges, such as high margin requirements that protect counterparties against adverse market movements that could wipe away their capital. In addition, the lack of transparency associated with off-exchange transactions makes it harder for regulators and law enforcement agencies to detect fraud and manipulation.

In a new complaint filed with the U.S. District Court for the Northern District of California, the Commodity Futures Trading Commission (CFTC) has sued Caroline Ellison and Gary Wang for engaging in fraud and misrepresentation in connection with an unregistered options trading strategy that was promoted by another former FBG employee, David Liss.

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The charges are the latest development in an ongoing legal battle between FBG Capital and Ellison. The CFTC has previously charged both companies with misappropriating client funds. In March, a federal judge ordered both companies to pay $2.8 million in restitution to investors.

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