CFTC: Portfolio Manager Found Liable for Making False or Misleading Statements

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Regulatory and Legal News

April 19, 2022

Washington, D.C. — The Commodity Futures Trading Commission today announced that on April 15, a jury in the U.S. District Court in the Western District of Wisconsin issued a verdict finding Edward S. Walczak liable for engaging in conduct that operated as a fraud or deceit upon investors, potential investors, or investment advisors, in violation of Section 4o(1)(B) of the Commodity Exchange Act (CEA).

The verdict was obtained after a 5-day trial that was the culmination of an action brought by the CFTC against Walczak on January 27, 2020, that alleged he misrepresented how he managed risk in the Catalyst Hedged Futures Strategy Fund. [See CFTC Press Release No. 8901-20] The jury found Walczak not liable for violations of CEA Sections 4o(1)(A) and 6(c)(1) and CFTC Regulation 180.1. Further proceedings will follow regarding sanctions.

“True and accurate disclosures are critical to investor protection,” said Acting Director of Enforcement Vincent McGonagle. “As we said at the outset of this case, the CFTC is committed to holding accountable individuals that misstate the risks of investing in their products.”

For the trial, the CFTC’s case was consolidated with a Securities and Exchange Commission (SEC) action against Walczak relating to the same conduct. The CFTC thanks the SEC and its staff for their hard work and cooperation through the consolidated trial. 

The Division of Enforcement staff members responsible for this action are Sam Wasserman, Peter Janowski, Meredith Borner, David Acevedo, Michael Cazakoff, John Buffington, Shantel Ogbuagu, Shelley Evans, and former staff member, Candice Aloisi. The trial team was also assisted by trial technician Dawn Miller.

Source: Commodity Futures Trading Commission

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