CFTC Registrations of Phy Capital Investments and its CEO Canceled

The U.S. derivatives regulator CFTC announced on Friday the cancellation of registrations of Phy Capital Investments LLC, a commodity pool operator, and its CEO Fabio Bretas de Freitas, who had been convicted of fraud and other related crimes.

It was in May 2019 that the U.S. watchdog filed a civil enforcement action in a federal district court charging Phy Capital and Bretas with commodity futures trading fraud. Specifically, the defendants fraudulently solicited at least $7.8 million from an unknown number of victims for their commodity pools and managed futures funds, but instead of trading commodity futures on exchanges, they misappropriated the victims' money. 

In October 2019, the court convicted the criminals and ordered them to pay a civil monetary penalty of about $12.6 million, restore about $4.63 million to their clients, and disgorge ill-gotten gains of about $5.75 million. Additionally, Phy Capital and Bretas have also been permanently banned from trading in markets under CFTC jurisdiction.   

During the course of the proceedings, status of the Florida commodity pool operator, which was founded in June 2015, had changed from 'Active' to 'Inactive'. In may this year, the U.S. regulator launched the legal procedure for canceling the registrations of the company and its owner.