Office of Proceedings 

U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 


1155 21st Street, NW, Washington, DC 20581 


www.cftc.gov 

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Daniel J. Emily, 

Complainant, 

v. 

Guy K. Gleichmann, and 

United Strategic Investors Group LLC, 

Respondents. 

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CFTC Docket No. 14-Roo7 

Served electronically 

INITIAL DECISION 

Introduction 

Daniel Emily claims that Guy Gleichmann churned his discretionary account and 

disregarded his instructions to close his account. Emily also questions the wisdom of 

certain option spreads. Gleichmann denies the allegations. As explained below, after 

reviewing both parties' documentary evidence and evaluating their oral testimony, I 

have concluded that Emily has established by a preponderance of the evidence that 

Gleichmann churned his account and that Emily is entitled to an award of $1,121. 

Factual Findings 

1. Daniel Emily, a resident of Kansas City, Missouri, has a bachelor's degree in 

chemical engineering. He owned a construction business, Atlas Steel, for over two 

decades. After Atlas ceased operations in 2008, he worked part-time at FedEx and as a 

census worker during 2008-2012. Emily has traded futures and options since 1997 

with a variety of firms, including the boiler room Commonwealth Financial, since 1990. 
In addition, during the relevant time, Emily read various financial publications and 

listened to radio shows that discussed the market and trading strategies. [See Emily 

testimony at pp. 6-7, 13, and 24-25, hearing transcript; and Emily statement produced 

as Exhibit 2.] 

Emily's testimony revealed that he is generally intelligent and sincere. He could 

remember broad details, such as that by December 2011 he had become concerned by 

mounting commission charges. However, he gave vague and uncertain testimony about 

when and how he instructed Gleichmann to cease trading. [See Emily testimony at pp. 

25-33, hearing transcript.] 

2. Guy Gleichmann, a resident of Pompano Beach, Florida, was registered with 

the National Futures Association ("NFA") from 1985 to 2013. From 1985 to 2001, 

Gleichmann was a registered associated person with a string of firms that were 

disciplined by the CFTC or the NFA for fraudulent sales practices: Multivest Options, 

Bachus & Stratton, Futures Trading Group, FSG International, Barkley Financial and 

Trinity Financial Group. Subsequently, Gleichmann was a registered associated person 

and listed principal with U.S. Investment Group from 2001 to 2004, and United 

Strategic Investors Group ("USIG") from 2004 to 2013. USIG was a registered 

introducing broker from 2004 to 2008, and a registered commodity trading advisor 

from 2008 to 2013. [NFA records; see Gleichmann testimony at pp. 18-19, hearing 

transcript.] 

3. From 2004 to October 2008, Emily maintained a non-discretionary USIG 

account. During this time, Emily relied on Gleichmann's trading advice in selecting 

trades and the results were mixed, but Emily was generally satisfied with Gleichmann's 

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advice. [See Emily testimony at pp. 10, 12 and 23, and Gleichmann testimony at pp. 20­

22, hearing transcript.] 

4. In October 2008, Gleichmann decided to switch from doing business as an 

introducing broker to a commodity trading advisor ("CTA"), and began doing business 

as Wavelength CTA. On October 24, 2008, Emily signed a Wavelength CTA disclosure 

document, and a power of attorney granting Gleichmann discretionary trading 

authority. Emily initially committed a total of $7,500 to the Wavelength account with 

two deposits: the first for $3,500 in December 2008; and the second for $4,000 in 

March 2009, when trading began. On January 13, 2012, Emily signed an updated 

Wavelength CTA disclosure document. [See Emily testimony at pp. 23, and 

Gleichmann testimony at pp. 21-22, hearing transcript.] 

5. Emily realized net profits the first three years in the Wavelength account: 

$5,284 in 2009, $4,104 in 2010, and $2,074 in 2011. Emily realized a $2,ooo loss in 

2012. Emily was charged $6,038 in commissions and fees in 2011, and $1,164 in 2012. 

During the time most relevant to the churning charge - March 2011 to February 

2012 - Gleichmann's trading generated $6,961 in commissions and fees. Most ofthese 

trades were a mixture ofsingle-lot or small-lot futures day trades, and short-term 

options trades, in a variety of commodities. In seven out of the seventeen months -- i.e., 

March, April, August, September, November and December 2011, and February 2012 -­

a substantial portion of the futures trades involved frequent day trades in various energy 

products. Not coincidentally these were the months when most ofthe commissions 

were generated. [See monthly account statements produced by Gain Capital.] 

Set out below is the month-end net liquidating value, and commissions and fees 

charged, for the Emily account, from January 2011 to May 2012: 

3 

Month NLV1 Commissions and tees 

Jan. '11 $11,264 $198 

Feb. '11 21,999 0 

Mar. '11 12,432 1,386 

Apr. '11 11,312 990 

May'11 9,491 396 

Jun. '11 7,382 99 

Jul. '11 8,079 198 

Aug. '11 8,541 198 


Sept. '11 7,348 742 

Oct. '11 5,057 445 
 Nov. '11 4,343 594 

Dec. '11 1,851 792 

Jan. '12 3,395 445 

Feb. '12 2,438 676 

Mar. '12 2,166 16 

Apr. '12 2,092 19 
 May'12 145 8 


[Id.] 

In 2011, Emily noticed that Gleichmann had modified his trading style and had 

begun generating greater commissions, and by December 2011 Emily had become 

concerned by losses and mounting commissions. Nonetheless, he decided to let 

Gleichmann continue trading and signed the updated CTA disclosure document in midJanuary 2012. [See Emily's Exhibit 3, produced January 6, 2016; and Emily testimony 

at pp. 23-33, 36-38 and Gleichmann testimony at pp. 33-34, hearing transcript.] 

The depleted account was closed out in July 2012. Emily filed his reparations 

complaint on January 2, 2014. 

Conclusions 

The approximately $100 per-contract commissions and fees charged by 

Gleichmann in 2011and2012 for trading Emily's discretionary account were well above 

1 In March 2011, Emily withdrew $10,000. In August 2011, Emily wired $2,525 to his account, and 

another $1,ooo in May 2012. In July 2012, he withdrew the closing account balance of $90. 

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the industry norm as determined by the National Futures Association in 2007, and thus 

were sufficiently dissociated from recouping costs and making a reasonable profit to be 

deemed a red flag of questionable trading practices. See NFA Interpretive Notice #9021 

Compliance Rule 2-9: Enhanced Supervisory Requirements (Nov. 1, 2007). See also 

Hinch v. Commonwealth Financial Group, Comm. Fut. L. Rep. ~27,056 (CFTC May 13, 

1997); Ferriola v. Kearse-McNeill, Comm. Fut. L. Rep. ~28,172 (CFTC June 30, 2000); 

and Darrah v. First American Investment, Comm. Fut. L. Rep. ~ 31,923 (CFTC 

December 10, 2010). Accordingly, the $100 per-contract commissions and fees that 

Gleichmann charged Emily to trade his discretionary account were presumptively 

excessive. 

Here, Gleichmann has offered no justification for the size of the commissions or 

for the frequent day trades that generated the bulk of the commissions, and Gleichmann 

has offered no proof that he ever gave Emily, at any point in time in 2011 or 2012, 

accurate information regarding the adverse impact of those expenses on profitability. 

Accordingly, Emily has proven by a preponderance ofthe evidence that Gleichmann 

controlled the trading activity and generated excessive commissions, and thus churned 

Emily's account, in violation of Sections 4b(a)(1)(A) and 4c(b) of the Commodity 

Exchange Act and CFTC rule 33.1o(a). The proper measure of damages for these 

violations is the commissions charged during the period of churning. However, the 

statute oflimitations set out in Section 14(a)(1) of the Act bars recovery of any damages 

incurred more than two years before Emily filed his reparations complaint on January 2, 

2014. Therefore, the damage award must be limited to the $1,121 commissions incurred 

in the last two months that Gleichmann churned the account, January and February 

2012. 

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The Commission generally does not second-guess the trading strategy employed 

or recommended by an advisor. The fact that a strategy proves unprofitable does not, by 

itself, create an inference of violations. Here, Emily has not produced any evidence 

beyond trading losses to shift the burden to Gleichmann to articulate the basis for the 

options spreads the wisdom of which Emily has generally second-guessed. See 

Syndicate Systems v. Merrill Lynch, Pierce, Fenner & Smith, Comm. Fut. L. Rep. 

~ 23,289(CFTC1986); and Yrag Traders v. Liberty Trading Group, Comm. Fut. L. 

Rep. ~ 33,363 (CFTC 2014). Accordingly, Emily has failed to establish any violations on 

top of churning in connection with Gleichmann's options trades. 

Finally, Emily has failed to establish a date certain when he gave any 

unambiguous instruction to cease trading. 

ORDER 

Daniel J. Emily has established by a preponderance of the evidence that Guy K. 

Gleichmann churned his account in violation of Sections 4b(a)(1)(A) and 4c(b) of the 

Commodity Exchange Act and CFTC rule 33.1o(a), and that these violations proximately 

caused $1,121 in damages, and that United Strategic Investors Group LLC is liable for 

Gleichmann's violations pursuant to Section 2(a)(1)(B) of the Act and CFTC rule 1.2. 

Accordingly, Guy K. Gleichmann and United Strategic Investors Group LLC are 

ordered to pay to Daniel J. Emily reparations of $1,121, plus pre-judgment and postinterest on that amount at i.10% compounded annually from February 29, 2012, to the 

date of payment, plus $125 in costs for the filing fee. Liability shall be joint and several. 

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Dated this 23rd day of May 2017. 

{41/MJ~ Philip V. McGuire, 

Judgment Officer 

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