FINRA

WITHOUT ADMITTING OR DENYING THE FINDINGS, FRANCISCO CONSENTED TO THE SANCTION AND TO THE ENTRY OF FINDINGS THAT HE FAILED TO PROVIDE FINRA WITH REQUESTED INFORMATION AND DOCUMENTS AND FAILED TO APPEAR FOR A FINRA-REQUESTED ON-THE-RECORD INTERVIEW.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All Capacities

Indefinite

3/26/2014

U.S. COMMODITY FUTURES TRADING COMMISSION

CFTC RELEASE 6460-12, DECEMBER 13, 2012: THE U.S. COMMODITY FUTURES TRADING COMMISSION (CFTC) ANNOUNCED THAT IT FILED A CIVIL ENFORCEMENT ACTION IN THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AGAINST A REGISTERED COMMODITY POOL OPERATOR (CPO) WITH ITS PRINCIPAL PLACE OF BUSINESS IN NEWPORT COAST, CALIF., AND ITS PRINCIPALS, RENIERO FRANCISCO AND HIS CO-DEFENDANT, BOTH CALIFORNIA RESIDENTS. THE CFTC COMPLAINT CHARGED THE DEFENDANTS WITH DEFRAUDING INVESTORS IN CONNECTION WITH OPERATING A COMMODITY POOL TO TRADE COMMODITY FUTURES CONTRACTS AND OPTIONS, MAKING FALSE STATEMENTS TO POOL PARTICIPANTS, MISAPPROPRIATING POOL FUNDS, AND MAKING FALSE STATEMENTS IN FILINGS WITH THE NATIONAL FUTURES ASSOCIATION (NFA). THE CFTC COMPLAINT ALSO CHARGED THE DEFENDANTS WITH FAILING TO REGISTER WITH THE CFTC DURING THE FIRM'S FIRST YEAR OF OPERATING AS A CPO. ON DECEMBER 12, 2012, THE SAME DAY THE COMPLAINT WAS FILED, THE U.S. DISTRICT COURT ENTERED AN EX PARTE RESTRAINING ORDER FREEZING THE DEFENDANTS' ASSETS, AUTHORIZING EXPEDITED DISCOVERY BY THE CFTC, AND PROHIBITING THE DEFENDANTS FROM DESTROYING OR CONCEALING BOOKS AND RECORDS. THE JUDGE SET A HEARING DATE ON THE CFTC'S MOTION FOR A PRELIMINARY INJUNCTION FOR DECEMBER 21, 2012. THE CFTC COMPLAINT ALLEGED THAT FROM AT LEAST FEBRUARY 2010 THROUGH JANUARY 2012, THE DEFENDANTS CARRIED OUT A FRAUDULENT SCHEME TO MISAPPROPRIATE MILLIONS OF DOLLARS FROM INVESTORS IN COMMODITY FUTURES AND OPTIONS. THE DEFENDANTS ALLEGEDLY COLLECTED FUNDS FROM 39 INVESTORS TOTALING MORE THAN $9.5 MILLION, OF WHICH THE DEFENDANTS PAID THEMSELVES $4.125 MILLION IN PURPORTED FEES WHILE LOSING OVER $4.8 MILLION TRADING. IN ORDER TO PERPETUATE THEIR SCHEME, THE DEFENDANTS ALLEGEDLY PROVIDED FALSE QUARTERLY STATEMENTS TO INVESTORS AND FILED FALSE QUARTERLY REPORTS WITH THE NFA. FOR EXAMPLE, THE COMPLAINT ALLEGED THAT THE NFA, AS A RESULT OF ITS EXAMINATION, DETERMINED THAT THE FIRM'S SEPTEMBER 2011 POOL QUARTERLY REPORT (PQR) HAD FALSELY REPORTED A POSITIVE 99 PERCENT RATE OF RETURN IN SEPTEMBER 2011, WHEN IN REALITY THE FIRM'S RATE OF RETURN WAS NEGATIVE 46.98 PERCENT. NFA ALSO DETERMINED THAT THE FIRM'S PQR HAD FALSELY REPORTED A NET ASSET VALUE (NAV) OF $8,421,139 AS OF SEPTEMBER 30, 2011, WHEN IN REALITY THE FIRM'S NAV AS OF THAT DATE WAS APPROXIMATELY $523,000, ACCORDING TO THE COMPLAINT. IN ITS LITIGATION, THE CFTC SOUGHT RESTITUTION AND A RETURN OF ILL-GOTTEN GAINS, CIVIL MONETARY PENALTIES, TRADING AND REGISTRATION BANS, AND PERMANENT INJUNCTIONS AGAINST FURTHER VIOLATIONS OF THE FEDERAL COMMODITIES LAWS, AS CHARGED. IN A PARALLEL CRIMINAL ACTION, ON DECEMBER 12, 2012, THE U.S. ATTORNEY'S OFFICE FOR THE SOUTHERN DISTRICT OF NEW YORK ANNOUNCED THAT IT FILED A CRIMINAL COMPLAINT CHARGING BOTH FRANCISCO AND HIS CO-DEFENDANT WITH CONSPIRACY, SECURITIES FRAUD, AND WIRE FRAUD OFFENSES. BOTH DEFENDANTS WERE ARRESTED IN CALIFORNIA BY AGENTS FROM THE FEDERAL BUREAU OF INVESTIGATION (FBI).

Judgment Rendered

Civil and Administrative Penalty(ies)/Fine(s)

Restitution

$8,256,672.00

Injunction

PERMANENT REGISTRATION AND TRADING BANS; POST JUDGMENT INTEREST