Commodities Fraud

When an investor has a dispute regarding commodities or futures with their broker, the dispute most likely will be forced into arbitration from the onset.  Per a Supreme Court ruling, brokers and brokerage firms are allowed to place a mandatory arbitration for disputes clause in their new customer agreement contracts.  For the most part, unless the investor negotiated otherwise, these contracts are standard across the industry, hence; commodities and futures fraud cases usually are resolved via a panel of three independent arbitrators. 

Trading futures entails investors signing a contract with the promise to buy or sell a given number and rating of a certain commodity at a specified date in the future.  Common commodities traded via futures contracts include currency, livestock, energy, soft commodities, metals, and other financials. Trading these futures takes place at a federally licensed exchange, or if applicable, at a foreign commodity exchange. 

Commodity Fraud Regulations

All commodity exchanges have self-regulatory organizations, which provide regulatory oversight protecting investors from fraud; however, incidents of commodities fraud still occur regularly. For example, many commodities fraud case claims are filed on the following grounds, including churning accounts, trading violations, unauthorized trading, converting funds, failure to supervise by brokerage firms, and fraud.  Additionally, mismanagement of accounts, such as failure to make trades, unsuitable investments, trades against an investor, wash sales, and accommodation trading are all also grounds for legal action.  Likewise, any breach of fiduciary duty owed to investors by a broker can be challenged via arbitration, as well as cases of misrepresentations, failure to disclose risk, deceptive selling, practices, and using unregistered sales personnel.

Getting Legal Help

If you have incurred financial losses while trading on the futures market due to commodities fraud, an investment fraud attorney can help file your claims, as well as represent your interests during dispute arbitration.

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