Office of Proceedings 

In the Matter of 

U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 

1155 21st Street, NW, Washington, DC 20581 

www.cftc.gov 

\..J I 

CHICAGO TRADING MANAGERS, LLC, 

Registrant. 

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CFTC Docket Number: SD 13-04 

______________________________ ) 

Before: 

Appearances: 

Introduction 

INITIAL DECISION ON DEFAULT 

Philip V. McGuire, 

Commodity Futures Trading Commission 

Laura Martin, Esq., Trial Attorney 

Division of Enforcement, Commodity Futures Trading Commission 

140 Broadway, 19th Floor, New York, NY 10005 

This is a proceeding to revoke the registration of Chicago Trading Managers, LLC 

("CTM"), pursuant to Section 8a(2) of the Commodity Exchange Act ("Act"), 7 U.S.C. 

§8a(2)(2012), and Commission rules 3.6o(g) and 10.93, 17 C.F.R. §§ 3.6o(g) and 10.93 

(2013). CTM, a Delaware limited liability company located in Boulder, Colorado, is 

registered with the Commission as a commodity pool operator ("CPO") and commodity 

trading advisor ("CTA"). 

By motion dated November 26, 2013, the Commission's Division of Enforcement 

("Division") has moved for entry of a default judgment against registrant CTM, based on 

the failure of CTM to answer, or otherwise to appear or respond to, the Notice of Intent 
to Revoke Registrations of Chicago Trading Managers LLC, issued by the Commission 

on August 21, 2013 ("Notice"). The Notice alleges that CTM is subject to statutory 

disqualification from Commission registration based on an Order for Entry of Default 

Judgment, Permanent Injunction, Civil Penalties and Ancillary Equitable Relief Against 

A1jent Capital Markets LLC and Chicago Trading Managers LLC ("Default Order"), 

entered on May 15, 2013, by United States District Court for the Southern District of 

New York, which: found, inter alia, that CTM committed fraud in violation of Sections 

4b(a)(l)(A)-(C) and 4o(l)(A) and (B) ofthe Act, 7 U.S.C. §§ 6b(a)(l)(A)-(C) and§6o(l)(A) 

and (B)(2oo6); permanently enjoined CTM from directly or indirectly committing any 

further fraud in violation of Sections 4b(a)(l)(A)-(C) and 4o(l)(A) and (B) of the Act, 7 

U.S.C. §§ 6h(a)(l)(A)-(C) and§ 6o(l)(A) and (B) (2006); and further enjoined CTM 

from, inter alia, applying for registration or claiming exemption from registration, and 

entering into, or soliciting, receiving or accepting funds from any person for the purpose 

of entering into, any transactions involving commodity futures, options on commodity 

futures, commodity options, securities futures products, swaps, and/or forex contracts. 

CFTC v. Arjent Capital Markets LLC, et al., 12-CV-l 832 (S.D.N.Y.). On August 22, 

2013, the Commission's Proceedings Clerk served the Notice on CTM at its last 

registered address.l Thus, CTM was properly served pursuant to CFTC rule 3.50. 2 

1 The CFTC Proceedings Clerk served the Notice on CTM at two addresses: CTM's Boulder, Colorado address 

listed with the National Futures Association; and in care of registered Agents Legal Services in Wilmington, 

Delaware. The U.S. Post Office returned the first package as unable to deliver or forward, and reported the second 

address as void and returned that package. 2 Pursuant to CFTC rule 3.30(a), 17 C.F.R. § 3.30(a) (20 13), the address of each registrant as submitted on its 

application for registration or as submitted on the biographical supplement shall be deemed to be the address for 

delivery to the registrant for any communications fi·om the Commission, including any summons, complaint, notice 

and other written documents or correspondence, unless the registrant spec ifies another address for this purpose. 

CFTC rule 3.30(b), 17 C.F.R. § 3.30(b) (20 13), provides that each registrant, while registered and for two years after 

the termination of registration , must notify the National Futures Association ("NFA ") of any change of address, and 

that failure to do so may result in an order of default in any Commission orNFA proceedings. Moreover, pursuant 

to CFTC rule 3.50, 17 C.F.R. § 3.50 (20 13), for purposes of an action for the denial, suspension or revocation of 

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CTM did not respond to the Commission's Notice. Therefore, on September 26, 

2013, I issued a Default Notice finding that CTM was in default, and setting deadlines 

for the Division to file a motion for entry of a default judgment and for CTM to file any 

opposition to the Division's motion.3 Subsequently, the Division timely filed a motion 

for entry of a default judgment, and CTM failed to file a response to the Default Notice 

or to the Division's motion. Accordingly, this matter is ripe for ent1y of a default 

judgment. 

As a result of its default, CTM has waived a hearing on all of the issues, and is 

precluded from introducing evidence of mitigation and rehabilitation which is necessary 

to rebut the strong presumption of unfitness for registration created by the findings of 

fact, conclusions oflaw, and sanctions in the Default Order. As a result, the well-plead 

allegations in the Notice, as augmented by the evidence produced by the Division, and 

as supplemented by the proposed findings and conclusions in the Division's motion, are 

deemed true and conclusive for purposes of finding that CTM is statutorily disqualified 

from registration under Sections 8a(2)(C) and (E) of the Commodity Exchange Act 

("Act"), 7 U.S.C. §§ 8a(2) (C) and (E)(2012). Thus, as set out below, the Division's 

motion has been granted, CTM has been found to be conclusively unfit for registration 

and statutorily disqualified from registration, and the CPO and CTA registrations of 

CTM have been revoked. 

registration, service upon a registrant will be sufficient if mailed by registered mail or certified mai I return receipt 

requested properly addressed to the registrant at the address shown on his application or any amendment thereto, and 

will be complete upon mailing. 3 This Det~1lllt Notice was served on CTM in care of Spencer l(imble Montgomery- a listed principal ofCTM, and 

CTM's designated contact for compliance and registration matters and communications from the CFTC- at his 

Superior, Colorado address listed with the NFA. The Post Office reported that the package was "Not deliverable as 

addressed unable to forward. " Accordingly, this Initial Decision will be served on CTM at its Boulder, Colorado 

address listed with the NFA. 

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Findings of Fact 

1. Chicago Trading Managers LLC ("CTM") is a Delaware limited liability 

company whose current listed address vvith the Commission is 1919 14th Street, Suite 

8o8, Boulder, CO 80302. CTM has been registered with the Commission as a CPO and 

CTA since July 29, 2008, pursuant to Section 4111 of the Act, 7 U.S. C. § 6m(2012).4 

2. On March 13, 2012, the Commission filed a federal civil injunctive action 

against CTM, Arjent Capital Markets LLC, Spencer Montgomery and Brian Reynolds. 

CFTC v. A1jent Capital Markets LLC, et al., 12-CV-l 832 (S.D.N.Y.) ("CFTC v. A1:jent"), 

which alleged, inter alia, that defendant CTM fraudulently operated two commodity 

pools, Cbicago Trading Partners US LLC, and Chicago Trading Partners International 

Ltd., and engaged in multiple acts of delivering material false statements to pool 

participants in violation of the anti-fraud provisions of the Act. CTM and Arjent failed 

to answer the Commission's complaint or otherwise to defend the action, and the 

Commission filed a motion for entry of a default judgment, permanent injunction and 

ancillary relief. 

3. On May 15, 2013, in CFTC v. A7]·ent, the Honorable Judge Lewis A. Kaplan of 

the the United States District Court for the Southern District of New York entered an 

Order for Entry of Default Judgment, Permanent Injunction, Civil Penalties and 

Ancillary Equitable Relief Against Arjent Capital Markets LLC and Chicago Trading 

Managers LLC ("Default Order"). The Default Order contained findings offact and 

conclusions of law, which found, inter alia, that on at least ten occasions, CTM issued or 

caused to be issued statements to pool participants that fraudulently inflated the Net 

Asset Value for pools in that the statements did not reflect the dilution ofthe pools' 

4 NF A records, attachment to Jung Affidavit and Certification, Exhibit 3, Division's motion. 

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assets caused by debits held in a trading account along with the pools' assets. The 

Default Order found that by engaging in this conduct, CTM committed fraud in violation 

of Sections 4b(a)(l)(A)-(C) and 4o(l)(A) and (B) ofthe Act, 7 U.S. C.§§ 6b(a)(l)(A)-(C) 

(Supp II 2009) and§ 6o(l)(A) and (B)(2oo6). 

The Default Order permanently enjoined CTM from directly or indirectly 

committing any further fraud in violation of Sections 4b(a)(l)(A)-(C) and 40(1)(A) and 

(B) of the Act, 7 U.S.C. §§ 6b(a)(l)(A)-(C) and§ 6o(l)(A) and (B) (2006). The Order 

further enjoined CTM from: applying for registration or claiming exemption from 

registration; entering into any transactions involving commodity futures, options on 

commodity futures, commodity options, securities futures products, swaps, and/or forex 

contracts, for its own personal accounts or for any accounts in which it has a direct or 

indirect interest; controlling or directing the trading for or on behalf of any other 

person or entity, whether by power of attorney or otherwise in any account involving 

commodity futures, options on commodity futures, commodity options, security futures 

products, swaps and/or forex contract; and soliciting, receiving or accepting any funds 

from any person for the purpose of purchasing or selling any commodity futures, 

commodity options, security futures products, swaps and/or forex contract. 

Discussion and Conclusions of Law 

Section 8a( 2) presumption of unfitness 

Section 8a(2) of the Act, 7 U.S.C. § 12a(2) (2012), sets out eight grounds for 

denial, suspension or revocation of registration, known customarily as "statutory 

disqualifications." According to the relevant House Agriculture Committee Report, each 

Section 8a(2) disqualification involves a previous formal determination by a court, or 

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the Commission or other government agency, that a person or firm has engaged in 

conduct involving "especially grave offenses that are clearly related to a person's [or 

firm's] fitness for registration with the Commission. " H.R. report No. 97-565, Part I at 

50 (May 17, 1982). The report further explained that, since each Section 8a(2) 

disqualification is based upon a previous finding or order by a court, or the Commission 

or other governmental body, "whether or not a person is subject to such a 

disqualification generally is readily ascertainable by checking officially maintained 

records." Id. 

In conjunction with the Commission's Part 3 rules, a Section 8a(2) 

disqualification generally operates as a strong presumption that a person or firm is 

conclusively unfit to do business in a relevant registered capacity. The Commission has 

noted that the strong presumption of unfitness for registration under Section 8a(2) of 

the Act rests on the common-sense inference that once an individual or firm has 

undertaken serious wrongdoing - as it has been amply demonstrated here that CTM has 

done - a substantial risk exists that the individual or firm will undertake similar 

wrongdoing in the future. See In re Alcar, Comm. Fut. L. Rep. ,]22,297 (CFTC 1986). 

The strong presumption of unfitness can be rebutted by a convincing showing that 

allowing a person or firm to become or remain registered will not pose a risk to the 

public, including, for example, mitigating circumstances, rehabilitation, or close 

supervision by another registrant. See Commission rules 3.6o(b)(2)(i) and 

3.6o(b)(2)(ii)(A)-(C), 17 C.F.R. §§ 3.6o(b)(2)(i) and 3.6o(b)(2)(ii)(A)-(C) (2013). By 

defaulting, CTM has precluded itself from presenting such rebuttal evidence. 

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Section 8a(2)(C) of the Act 

Section 8a(2)(C) of the Act, 7 U.S.C. § 12a(2)(C)(2012), in relevant part, 

authorizes the Commission to revoke the registration of any person "if such person is 

permanently ... enjoined by order, judgment, or decree of any court of competent 

jurisdiction ... including an order entered pursuant to an agreement of settlement to 

which the Commission ... is a party, from ... (i) acting as a futures commission merchant, 

introducing broker, floor broker, floor trader, commodity trading advisor, commodity 

pool operator, associated person of any registrant under this Act, securities broker, 

securities dealer, municipal securities broker, municipal securities dealer, transfer 

agent, clearing agency, securities information processor, investment adviser, investment 

company, or affiliated person or employee of any of the foregoing or (ii) engaging in or 

continuing any activity when such activity involves ... fraud .... " Here, cause exists for 

the statutory disqualification of CTM pursuant to Section 8a(2)(C) of the Act, because 

the Default Order in CFTC v . ATJ·ent, which was entered by the court for the Southern 

District of New York, a court of competent jurisdiction, permanently enjoined CTM 

from registering under the Act and committing fraud in violation of the Act. 

Section 8a(2)(E) of the Act 

Section 8a(2)(E) of the Act, 7 U.S.C. § 12a(2)(E)(2012), in relevant part, 

authorizes the Commission to revoke the registration of any person "if such person, 

within ten years preceding the filing of the application [for registration] or any time 

thereafter, has been found in a proceeding brought by the Commission ... (i) to have 

violated any provision of [the] Act.. . where such violation involves ... fraud [or] 

misappropriation of funds .... " Cause also exists for statutory disqualification pursuant 

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to Section 8a(2)(E) of the Act because CTM was found to have violated the Act for 

conduct involving fraud in CFTC u. A1jent. 

ORDER 

Chicago Trading Managers LLC is statutorily disqualified from registration under 

Sections 8a(2)(C) and (E) of the Commodity Exchange Act. Accordingly: one, the 

Division's motion for entry of a default judgment is hereby granted; two, Chicago 

Trading Managers, LLC is found conc1usively unfit for registration; and three, the 

commodity pool operator and commodity trading advisor registrations of Chicago 

Trading Managers, LLC are hereby revoked. 

Dated December 27, 2013. 

171~ ry )/{ ·d ~ Ph~cGuire, Judgment Officer 

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