The National Futures Association (NFA) recently announced a member responsibility action against NFA member and commodity trading advisor Novo Trading LLC (Novo) along with the firm’s principal Thomas H. O’Connell, Jr. Novo is based in Oak Park, Illinois. NFA took this emergency action in order to protect Novo’s customers.
Novo opened its doors in September 2013 as a commodity trading advisor. O’Connell became registered through Novo as a principal and associated person. Additionally, Jerry J. Considine became listed as a principal and chief executive officer of the firm; however, Considine did not become registered as an associated person.
To solicit customers, Novo and O’Connell allegedly utilized two websites with false and misleading promotional material that included “inaccurate rates of return (ROR) and grossly overstated assets under management (AUM).” These results purportedly went back to 2008.
NFA found that the firm’s alleged trading results dating back to 2008 were suspicious because Novo did not specify that these results were achieved on proprietary accounts and because Novo, Considine Trading (Novo’s predecessor) and Considine were not registered from 2008 through September 2013.
NFA conducted an unannounced examination at Novo’s offices in Oak Park, Illinois in early December and requested that Novo provide financial documentation supporting its AUM and ROR claims. Novo failed to satisfy NFA’s document request.
NFA also could not determine funding sources for Novo’s commodity brokerage account. Upon further review, the NFA discovered that Considine had opened accounts in his own name and a new one in a family member’s name on the day following NFA’s examination.
Based on these findings, NFA suspected that Considine and Novo had used the money in the Novo account to fund the trading account belonging to Considine’s family member. In addition, Novo’s bank statements indicated that Considine regularly transferred hundreds of thousands of dollars out of the account to at least one other unidentified checking account.
Considine and O’Connell failed to comply with NFA’s request to provide documents verifying the owner of the unidentified account to which the funds were transferred.
NFA was unable to determine the source of funding for Novo’s bank account and therefore speculated that Novo and Considine had utilized customer money to fund trading accounts for Considine’s personal benefit and for the benefit of his family member. Novo allegedly also misled and lied to the NFA during the examination.
Blau & Malmfeldt invites Novo customers to contact us at 312-443-1600 for a complimentary case evaluation. Blau & Malmfeldt is a law firm that represents investors across the United States in securities, commodity futures, partnership and shareholder rights disputes.