Release : #4241-99 (CFTC Docket No. 99-7)

For Release: March 4, 1999

CFTC FILES ENFORCEMENT ACTION ALLEGING COMMODITY OPTIONS FRAUD
    AGAINST DUNHILL FINANCIAL GROUP, INC., MARK HUTCHERSON AND KEVIN JACKAM;
    RESPONDENTS ALLEGEDLY SOLICITED CUSTOMERS OVER THE INTERNET; CFTC Action
    Also Alleges New Millennium Promotions, Michael Thomas, and Forrest Dayton,
    Jr. Violated CFTC Registration Requirements

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced
    today the filing of a four-count
    administrative complaint alleging that Dunhill Financial Group,
    Inc. (Dunhill); Mark Hutcherson, Dunhill's Sales Manager; and Kevin Jackam, Dunhill's Compliance Officer, all of the
    Atlanta, Georgia area, violated anti-fraud provisions of the Commodity
    Exchange Act (CEA) and CFTC regulations by fraudulently soliciting
    prospective customers to open accounts to trade options on commodity
    futures contracts.

The CFTC complaint alleges that Dunhill, Hutcherson, and Jackam made
    false, deceptive, and misleading statements regarding the trading of
    commodity options in publicly disseminated advertisements over the
    Internet, on the radio, in promotional materials sent to customers, and in
    direct telephone solicitations of prospective customers.

The complaint also alleges that New Millennium Promotions (New
    Millennium), Michael Thomas and Forrest Dayton, Jr., also of
    the Atlanta, Georgia area, violated the CEA's registration requirements and
    CFTC regulations. The complaint alleges that New Millennium, without being
    registered, operated as an introducing broker (IB) by soliciting
    prospective customers over the Internet on Dunhill's behalf in return
    for a fee paid by Dunhill. Thomas and Dayton are charged with failing to
    register as associated persons of New Millennium.

Specifically, the CFTC complaint alleges that Dunhill, Hutcherson, and
    Jackam fraudulently misrepresented, among other things, that customers who
    purchase options on futures contracts will profit from seasonal and other
    existing and known supply and demand forces that affect the prices of
    certain commodities in the cash market. The complaint further alleges that
    Dunhill, Hutcherson, and Jackam made fraudulent misrepresentations, and
    omitted disclosing material facts, concerning:such that they:

-- misrepresented the likelihood of profit from trading commodity
    options;

-- misrepresented the risk of loss involved in trading commodity
    options; and

-- failed to disclose the amount of commissions charged to customers
      and the substantial impact that commissions had upon the customer's
      ability to earn a profit on options trading.


The complaint further alleges that at least 91.4 percent of the customer
    accounts opened by Dunhill from October 1995 through September 1998 lost
    money, and that total net losses, including commissions, were in excess of
    $9.3 million.

Dunhill, Hutcherson, Jackam, NMP and Thomas are also charged with
    failing to exercise diligently their supervisory responsibilities. Dunhill
    has been registered with the CFTC as an independent IB since September 27,
    1995.

Geoffrey Aronow, the Director of the Commission's Division of
    Enforcement, commented: "This proceeding presents a striking example of the
    many ways that people can now solicit business from the public, including
    the use of Internet websites and �spam' e-mail messages. As we
    see here, these new methods allow people to reach out to millions of people
    quickly and cheaply. This case demonstrates the Commission's ability
    and commitment to respond to these new methods when we believe that they
    are being used in an improper manner to cheat, defraud, and otherwise
    violate the law."

The CFTC's complaint institutes a public administrative proceeding to
    determine if the allegations in the complaint are true and, if so, what
    sanctions, if any, are appropriate and in the public interest. Possible
    sanctions include an order directing the respondents to cease and desist
    from violating the CEA and CFTC regulations, civil monetary penalties of
    not more than the higher of $100,000 or triple the monetary gain for each
    violation ($110,000 for each violation committed after November 27, 1996),
    and restitution to customers of damages proximately caused by the
    violations of the respondents.

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