UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

JOYCE A. SCHWEICKART and 

JAMES B. SCHWEICKART 

v. 

OTTO GERDT FEDDERN 

CFTC Docket No. 10-R018 

OPINION AND ORDER 

Complainants Joyce and James Schweickart (collectively, the "Schweickarts") and 

respondent Otto Feddern both appeal from a Judgment Officer's initial decision, which held that 

Feddern aided and abetted: (a) Victor Lyons and Aramis Capital Management, LLC in 

defrauding the Schweickarts; and (b) Aramis Capital in its violation of Commodity Futures 

Trading Commission ("CFTC" or "Commission") disclosure rules. 1 The Judgment Officer also 

found that Feddern proximately caused $34,420 in out-of-pocket losses to the Schweickarts, but 

limited the award to the amount that the Schweickarts requested in their complaint - $2000. In 

their appeal, the Schweickarts request that the Commission increase the award to the full amount 

of their loss- $34,420. In his appeal, Feddern requests that the Commission reverse the 

Judgment Officer's decision. For the reasons discussed below, we deny both appeals, and affirm 

both the Judgment Officer's conclusion that Feddern violated the Commodity Exchange Act 

("CEA"), and his award of damages.2 

1 Joyce A. Schweickart and James B. Schweickart v. Olio Gerdt Feddern, [20 11-2012 Transfer 

Binder] Comm. Fut. L. Rep. (CCH) ~ 32,047 at 67,379 (Oct. 5, 2011) ("Initial Decision"). 

2 Neither Feddern nor the Schweickarts appeal the liability determinations against the primary 

wrongdoers, Lyons and Aramis Capital. The Judgment Officer entered a default order against 

them before he issued his initial decision against Feddem. Default Order dated March 16,2011. 

The Judgment Officer found Lyons guilty of fraud in violation of CEA Section 4b(a), 7 U.S.C. 

§ 6b(a); that his conduct proximately caused damages totaling $2,000; and that Aramis Capital 
BACKGROUND 

Trade Losses 

The Schweickarts attended investment meetings hosted by Feddem between the fall of 

2007 and July 2008. Transcript of Telephonic Recording (May 17, 2011) ("Tr.") at 7-8, 24, 25; 

Initial Decision at 67,387. Mr. Schweickart possessed about ten years of stock- and bond-trading 

experience, but no futures or options trading experience, and Mrs. Schweickart possessed no 

trading experience. Tr. 7-8, 25; Initial Decision at 67,381. Feddem- who was not registered in 

any capacity with the Commission during the relevant period - introduced the Schweickarts to 

Lyons, touting the latter's trading strategy. Tr. at 9, 10, 13, 25, 31; Initial Decision at 67,381. 

Lured by pronouncements of positive trading results and minimal losses, the 

Schweickarts met with Feddem on July 11, 2008, to open a discretionary trading account. Tr. at 

12-13, 14, 24, 40-41; Initial Decision at 67,383-84. The account was to be managed by Lyons. 

Tr. at 14; Initial Decision at 67,348. Feddem instructed the Schweickarts to sign two documents: 

an account opening document, and Aramis Capital's CTA disclosure document. Feddem also 

induced the Schweickarts to backdate both documents to July 3, 2008. Initial Decision at 

67,384. A notice on the cover page of Aramis' CTA disclosure document warned that the 

document expired on July 3.3 (Schweickart Letter dated July 1, 2010; Initial Decision at 67,383, 

67,384). Although the Schweickarts had backdated the two documents, they used the correct 

was liable as a principal for Lyons' fraud under CEA Section 2(a)(l)(B), 7 U.S.C. § 2(a)(1)(B). 

Jd After Feddem produced a copy of Lyons' Notice of Chapter 7 Bankruptcy, the Judgment 

Officer vacated the default order against Lyons and dismissed the complaint against him without 

prejudice. Order of Dismissal. Because the bankruptcy case did not apply to Aramis Capital, the 

Default Order against Aramis Capital remained in effect and became a Commission final order. 

ld n.2. 

3 Although Lyons' CT A disclosure document stated that it was valid until July 3, 2008, in March 

2008, the National Futures Association had discovered multiple deficiencies in the document, 

and prohibited Lyons from soliciting any new clients until he had corrected those deficiencies. 

Initial Decision at 67,383. Those deficiencies had not been corrected when the Schweickarts 

signed the document. Jd The record does not indicate whether Feddem was aware of this 

prohibition. 

2 
date, July II, on the two checks that they wrote to open the account (a $40,000 check for their 

investment, and a $4000 check for Lyons' management fee). (Checks attached to Order 

Compelling Production). 

From August 2008 to July 2009, Lyons traded on the Schweickarts' behalf and lost most 

of their $40,000 investment. Tr. at 15-16; Initial Decision at 67,384. By the end of August 

2008, the Schweickarts' account balance had dropped to $25,889. (Account Statements attached 

to Complaint). Sometime after August but before January 2009, Lyons met with the 

Schweickarts at Feddem's office, and announced that he had changed his trading system and 

hoped to recover losses with a different and more conservative options trading strategy. Tr. at 

17-19; Initial Decision at 67,384. Lyons' hopes were in vain; the Schweickarts' account 

statements reflected the continuing decline of their account: 

• January 2009 opening balance: $13,772. 

• February 2009 opening balance: $9839. 

• May 2009 opening balance: $9809. 

By July 2009, the Schweickart's account statement showed a balance of$9,779.94, which was 

the amount that remained after trading losses and quarterly fees had been deducted. (Account 

Statements attached to Complaint). 

Proced11ral History 

Less than a year later, the Schweickarts filed a pro se reparations complaint against 

Lyons and Feddem. (Complaint dated May 28, 2010). They claimed that during the process of 

completing their complaint, they learned that Lyons possessed limited trading experience, and 

that Lyons had been suspended as a trader in September 2009. Complaint at 3. The 

Schweickarts sought $2000 in damages. 

3 
By letter dated June 23,2010 ("Proceedings Letter"), the Commission's Office of 

Proceedings advised the Schweickarts that they could pursue $30,220.06 in out-of-pocket losses 

because they "alleged misrepresentation, negligence, and breach of fiduciary duty," and asked 

them to confirm that they only intended to seek $2,000.4 The Schweickarts replied: "Although it 

was a hard lesson to learn we will accept [our] trading losses but still think we are due at least Y2 

of the $4000.00 annual fee due the inaction of both [Mr.] Lyons and [Mr.] Feddem." 

(Schweickart Letter dated July 1, 20 I 0). 

On January 4, 2011, the Commission's Office of Proceedings served a Notice of 

Summary Proceeding identifying the reparations matter as one where the Schweickarts sought 

damages, exclusive of interest and costs, ofless than $30,000. On May 17, 2011, the Judgment 

Officer conducted a telephonic hearing. On May 18, 2011, Feddem, acting upon the Judgment 

Officer's instruction, e-mailed to all parties fee charts and a version of the Aramis Capital 

disclosure document. (Feddem e-mail with two attachments). The introduction to this version of 

the disclosure document explained that Lyons was a party to a 2006 National Futures 

Association ("NFA") arbitration action where he was found liable of misconduct, and was 

required (along with another party) to pay claimants $286,000. (Aramis Capital disclosure 

document)). The disclosure document that the Schweickarts signed did not reveal Lyons' 

misconduct. 

In August 2011, the Judgment Officer instructed all parties to answer questions to help 

develop the evidentiary record concerning the aiding-and-abetting charge. (Order Compelling 

Production dated August 10, 2011). The Schweickarts filed an affidavit responding to the 

questions, and, in an accompanying cover letter, they requested to amend their complaint against 

4 To arrive at $30,220.06 in out-of-pocket losses, the Office of Proceedings subtracted the 

amount that remained in the Schweickarts' trade account- that is, $9779.94- from their initial 

$40,000 investment. 

4 
Feddern "for the full amount of [their] loss as stated in the enclosed affidavit." (Schweickart 

Letter dated August 22, 2011 ). They explained that they were unaware of Lyons' transgressions 

- in particular the misconduct that led to the 2006 NF A arbitration- and therefore wanted to 

increase their damages request. ld In their affidavit, the Schweickarts commented that neither 

Feddern nor Lyons ever revealed the 2006 NFA arbitration to them, and that, ifthey had known 

about Lyons' past, they would not have invested with him in 2008. (Schweickart Affidavit at 

Question 6). 

In his affidavit, Feddern admitted that he had not reported the 2006 NFA arbitration to 

the Schweickarts, and added, "[t]his was Lyons' responsibility NOT mine." (Feddern Affidavit 

dated August 29, 2011 at Question 8). Feddern also explained that he was unaware of the 2008 

NF A cease-solicitation order against Lyons so he did not reveal it to the Schweickarts. I d. In 

response to a question asking whether and why Feddern instructed the Schweickarts to backdate 

documents, Feddern replied, "IF this happened, it was at the behest of Lyons ... not me." /d. at 

Question 5. 

Initial Decision 

On October 5, 2011, the Judgment Officer entered his initial decision in favor of the 

Schweickarts; however, he denied the request to increase their damages claim, limiting the 

amount to $2,000. The Judgment Officer concluded that the Schweickarts' request to enlarge 

their damages claim came too late, given that nothing factually material had changed since they 

filed their reparations claim. /d. The Judgment Officer also observed that Feddern had 

presumably made litigation choices, including his choice to proceed without counsel, based on 

the dollar amount of the Schweickarts' claim. /d. The Judgment Officer also rejected Feddern's 

argument that he could not be the subject of a Commission reparations proceeding because he 

was not registered during the relevant period. The Judgment Officer relied on Commission 

5 
precedent, which holds that jurisdiction is appropriate because, even though Feddem was not 

registered at the time of the events challenged by the Schweickarts, he subsequently became 

registered. Initial Decision at 67,385. 

The Judgment Officer found that the record supported the conclusion that Lyons and 

Aramis Capital had defrauded the Schweickarts and had breached the Commission's disclosure 

rules. /d. at 67,385-86. Lyons and Aramis Capital, through Feddem, delivered to the 

Schweickarts an out-to-date and materially deficient disclosure document. /d. at 67,387. 

Furthermore, the Judgment Officer found that the evidence supported the conclusion that 

Feddem "knowingly committed a series of overt acts on July I I, 2008 that advanced Lyons' and 

Aramis' fraud on the Schweickarts" by, among other things, encouraging the Schweickarts to 

backdate their signatures, and "downplaying" the significance of the backdating. ld The 

Judgment Officer concluded that Feddem aided and abetted Lyons and Aramis Capital in 

deceiving the Schweickarts. /d. at 67,386-87. 

Tlze Appeals 

On appeal, Feddem objects to the Judgment Officer's finding that he aided and abetted 

Lyons and Aramis Capital by defrauding the Schweickarts, and by breaching the Commission's 

disclosure rules. Feddem suggests that the Commission lacks jurisdiction over him because he 

was not a Commission registrant during the relevant time, and was, therefore, unfamiliar with 

applicable Commission rules. (Feddem's Notice of Appeal at 3, 4). Feddem also maintains that 

he was never Lyqns' or Aramis' agent but merely enjoyed a referral relationship with Aramis 

Capital. (Feddem's Notice of Appeal at 2). 

The Schweickarts' appeal focuses on damages. (Schweickarts' Notice of Appeal dated 

October 21, 2011). They argue that they are entitled to recoup all of their losses because after 

they filed their reparations complaint they discovered two facts. First, they learned that Lyons 

6 
had been subject to a cease-solicitation directive during the time the Schweickarts let Lyons trade 

their account. (Schweickarts' Appeal Affidavit dated November 18, 2011 ). Second, they 

learned of the 2006 NFA arbitration penalizing Lyons for misconduct. (/d.; Schweickarts' 

Notice of Appeal dated October 21, 2011 ). 

DISCUSSION 

We agree with the Judgment Officer's determination that Feddern is subject to the 

Commission's reparations jurisdiction, and that he aided and abetted Lyons and Aramis Capital 

in violating the CEA. We also affirm the award of damages. 

I. Feddern's claim that he was unregistered at the time of the fraud and the delivery of 

misleading disclosure documents is of no consequence because Feddern became registered with 

the Commission within the two-year statute of limitations that applied to the Schweickarts' cause 

of action. Nelson Inc. Ret. Trust v. Diversified lnv. Group, Inc., [ 1984-1986 Transfer Binder] 

Comm. Fut. L. Rep. ~ 22,627 at 30,679 (CFTC June 5, 1985) (a person may seek a reparations 

award against anyone who becomes registered at any time within two years after the cause of 

action accrues); see also Initial Decision at 67,381 (Feddern registered as an AP in September 

2009). 

2. We also agree with the Judgment Officer's determination that Feddern is liable for 

aiding and abetting the misconduct of Lyons and Aramis Capital. Initial Decision at 67,386-87. 

As the Judgment Officer correctly noted, there are three elements to aiding and abetting. !d. The 

Commission must find that the wrongdoer 1) knowingly associates himself with an unlawful 

venture; 2) participated in that venture as something that he wishes to bring about; and 3) seeks 

by his actions to make it succeed. In re Richardwn Securities, Inc., [ 1980-1982 Transfer 

Binder] Comm. Fut. L. Rep. (CCH) ~ 21,145 at 24,646 (CFTC Jan. 27, 1981); see 11 U.S.C. 

§ 13c(a) (aiding and abetting is unlawful). In his appeal, Feddern claims that he was nothing 

7 
more than an unknowing liaison between Lyons and the Schweickarts. (Feddem Notice of 

Appeal dated Nov. 17, 2011 ). Yet, the record shows otherwise. Feddem delivered an outdated 

disclosure document to the Schweickarts. Initial Decision at 67,387. And then Feddem 

knowingly encouraged the Schweickarts to backdate that document- a fact that Feddem does 

not deny. Initial Decision at 67,387. (See also Feddem Affidavit dated August 29,2011, at 

Question 5). As the Judgment Officer correctly concluded, these facts satisfy all three elements 

of aiding and abetting, and establish that Feddem aided and abetted Lyons and Aramis Capital in 

their misconduct. Initial Decision at 67,387. See also Sanchez v. Crown, [2005-2007 Transfer 

Binder] Comm. Fut. L. Rep.~ 30,183 at 57,725 (CFTC Jan. 18, 2006) (Commission found 

respondent liable of aiding and abetting where respondent failed to provide disclosure documents 

to customer before account was opened). 

3. Finally, we affirm the Judgment Officer's denial of the Schweickarts' request to 

increase their damages claim from $2,000 to their full out-of-pocket losses, an amount in excess 

of$30,000.5 (Schweickart cover letter dated August 22, 2011). As described above, because the 

Schweikarts only requested $2000 in damages, the Office of Proceedings designated the case for 

summary proceeding. As a result, pursuant to the Commission's rules, the maximum amount of 

damages that the Schweikarts could recover was limited to $30,000. 17 C.F.R. § 12.26(b). 

Further, the Judgment Officer's authority to amend the damages claim was controlled by 

Commission rule 12.204(a), which provides that, "before the parties have concluded their 

submission of proot: the Judgment Officer may allow amendments of the pleadings either upon 

written consent of the parties, or for good cause shown, provided however, that any pleading as 

5 The Schweickarts did not cite a specific amount. Therefore, we are guided by the initial 

decision, in which the Judgment Officer calculated the Schweickarts' out-of-pocket losses as 

$34,420- the sum of$30,420 in trading losses and Lyons' $4,000 annual fee. Initial Decision at 

67,384. (We note that, based on the account statements in the record, it appears that the 

Schweickarts actually lost $34,220.06 - an amount that is $200 less than the amount cited by the 

Judgment Officer. The $200 difference does not alter the outcome of our decision.). 

8 
amended shall not contain an allegation of damages in excess of $30,000." 1 7 C.F .R. 

§ 12.204(a). Here, the Schweickarts sought an amount that was in excess of$30,000. For that 

reason, the Judgment Officer was without the authority to grant the amendment, and, therefore, 

his refusal to increase the Schweickarts' damage request is affirmed. 

Nor would it have been appropriate to grant the Schweickarts' request even if it had been 

limited to $30,000- an amount within the Judgment Officer's discretion. See Initial Decision at 

67,385 (discussion ofSchweickarts' motion to increase damages). The Judgment Officer 

determined correctly that, when the Schweickarts decided to limit their damage request to $2000, 

they were aware of the action that NFA took against Lyons in 2008. Initial Decision at 67,385. 

The Judgment Officer also concluded correctly that it was immaterial that it was not until later 

that the Schweickarts learned of the NFA's 2006 determination that Lyons engaged in 

misconduct. In particular, even without knowledge of this fact, the Schweickarts already were 

aware of facts sufficient to support their allegations of aiding and abetting. (See Complaint at 3 

(Schweickarts' knowledge of Lyons' suspension); Proceedings Letter dated June 23, 2010 

(Schweickarts' allegations listed); and Feddem e-mail dated May 18, 20 11, with two attachments 

(2006 NF A arbitration disclosed)). Further, there is no indication that Feddem took any action to 

hide evidence of the earlier NF A action from the Schweickarts. Even if the Schweickarts had 

known of the earlier NFA action against Lyons, this would not have changed the conclusion that 

Feddem's misconduct proximately caused the Schweickarts' out-of-pocket losses. Initial 

Decision at 67,3 87. 

We also agree with the Judgment Officer that a decision to increase damages would have 

been prejudicial to Feddem. ld at 67,385. Under Commission reparations rule 12.1, all rules 

must be "construed liberally so as to secure the just, speedy, and inexpensive determination of 

the issues presented with full protection of the rights of all parties." 17 C.F.R. § 12.1 (emphasis 

9 
added). Here, the Judgment Officer considered the effect that the Schweickarts' decision to limit 

their damage request to $2,000 may have had on Feddern, in particular, his decision to represent 

himself. Initial Decision at 67,385. Cf Rules Relating to Reparation Proceedings, 41 Fed. Reg. 

3994 {Jan. 27, 1976 (final rule)) ("no party to a reparation proceeding should be prejudiced by a 

technical or inadvertent violation of these [reparations] rules which does not prejudice the 

interest of any other party"); see generally Shea v. Clinton, 288 F.R.D. 1, 4 (D.D.C. 2012) (a 

court must consider the prejudice an opposing party might suffer before permitting amendments 

to pleadings under Fed. R. Civ. Proc. 15(a)(2)). 

We agree with the Judgment Officer that, had Feddern known that the Schweickarts 

would seek damages substantially in excess of $2000, this would have been likely to change his 

litigation strategy, including whether to retain legal counsel. Moreover, because the 

Schweickarts' request came so late in the process - that is, almost 15 months after the 

complaint's filing date, three months after the hearing, and simultaneous with the submission of 

post-hearing affidavits- the Judgment Officer would not have been able to protect Feddern from 

suffering undue prejudice. Cf Terekhina v. Capital Market Services, LLC, [2009-2011 Transfer 

Binder] Comm. Fut. L. Rep. (CCH) ~ 31,678 at 65,221 n.4 (Nov. 23, 2010) (Commission refused 

to strike a late filing given that a corrective measure such as offering the opposing party to time 

to respond avoided any prejudice suffered by the opposing party). See generally Shea v. Clinton, 

288 F.R.D. at 4 (courts should consider the length oftime between the last pleading and the 

amendment, as well as whether the amendment would affect discovery or cause delay). We, 

therefore, affirm the Judgment Officer's decision to grant the Schweickarts damages in the 

amount of $2000, their original request. 

10 
CONCLUSION 

For the foregoing reasons, the Judgment Officer's Initial Decision is affirmed. 

IT IS SO ORDERED.6 

By the Commission (Chairman GENSLER and Commissioners CHILTON, O'MALIA, AND 

WETJEN). 

Melissa D. Jurgens 

Secretary of the Commission 

Commodity Futures Trading Commission 

Dated: October 18, 2013 

6 Under CEA Sections 6(c) and 14(e), 7 U.S.C. §§ 9 and 18(e), a party may appeal a 

Commission's reparation order to the United States Court of Appeals for only the circuit in 

which a hearing was held; if no hearing was held; the appeal may be filed in any circuit in which 

the appellee is located. The CEA also states that such an appeal must be filed within 15 days 

after notice of the order, and that any appeal is not effective unless, within 30 days of the date of 

the Commission order, the appealing party files with the clerk of the court a bond equal to double 

the amount of the reparation award. 

11