The Commodity Futures and Trading Commission dismissed charges against a former broker/dealer principal who allegedly contributed to fraud committed by his employee and failing to supervise her. The CFTC found no evidence that Bruce Crown, former principal of the B/D Investors Trading Group, had knowledge of an employee’s wrongdoing and dismissed the complaint against him. In 2003, judgment officer Philip McGuire found that Lori Denn made unsuitable investment recommendations to Lawrence Sanchez, an unsophisticated investor. Denn was charged with making intentionally deceptive statements to Sanchez about the guaranteed profits he would reap from investments in unleaded gasoline options. McGuire alleged Crown and ITG had reinforced the false impressions created by Denn and Crown had failed to diligently supervise Denn.
McGuire found Denn, Crown, ITG and TechNet Trading, a futures commission merchant that had a guarantee agreement with ITG, jointly liable for a $24,396 to be paid to Sanchez. All respondents appealed McGuire’s decision. In dismissing the charges against Crown, the CFTC affirmed the liability of Denn, ITG and TechNet. The CFTC found that Sanchez had never relied upon anything Crown said to him and for that reason, Crown had not contributed to Denn’s fraud. Dennis Holden, spokesman of the CFTC, was not prepared to comment by press time. The counsel for the respondents could not be reached.