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Currency trader operating in Wyo being sued

Currency trader operating in Wyo being sued

Monday, September 12, 2011

Currency trader operating in Wyo being sued
By Wyoma Groenenberg - Wyoming Business Report

CHEYENNE — One of the businesses located at Cheyenne’s 2710 Thomes Ave., now known for headquartering shell companies, is being sued by federal regulators.

The Commodity Futures Trading Commission (CFTC) says 1st Investment Management LLC broke the law by selling foreign-currency contracts to the public without being registered with a government agency.

According to the Wyoming Secretary of State website, 1st Investment was incorporated on Sept. 24, 2007, as a domestic limited liability company, with headquarters at 2710 Thomes Ave., home of Wyoming Corporate Services.

Reuters News Service exposed Wyoming Corporate Services in late June as “a business incorporation specialist that establishes firms, which can be used as shell companies.” These incorporations allow companies to hide their assets.

After the news broke, Wyoming Secretary of State Max Maxfield told the Business Report that he believed the Reuters news crew missed the real story. He noted that Wyoming is one of the first states to address this issue.

“I’m furious that businesses are using Wyoming’s good name for bad. That’s what we’re working on. But it’s a process, not an event,” Maxfield said, noting that a 2009 law eliminated the use of anonymous drop boxes for business entities.

The secretary is recommending two statutes to the state Corporations Committee: a cease and desist law that will help streamline the process of dealing with fraudulent companies and control nominee officers, which won’t be allowed to lead companies.

“We’re trying to strike a balance,” Maxfield said. “We don’t want to chase the mom and pop businesses out.”

In its filing of the lawsuits, the CFTC is seeking to stop the firms from operating unless they register with it, and it wants civil fines and restitution. Other lawsuits announced last week were filed in federal courts in Illinois, New York and Utah.

In each case, the CFTC alleges that the firm solicited or accepted orders from U.S. investors for foreign-currency trades, a violation of the law because the firm wasn't registered. This was the CFTC’s second sweep of such companies.

The rules requiring foreign currency trading firms to register are intended to protect investors from potentially fraudulent operations, the agency said.

Wyoming Business Report