The Commodity Futures Trading Commission has launched a special investigation of London commodity options sales in south Florida, agency sources confirmed yesterday.
The CFTC has instigated a strike force operation there is response to a request by Florida Attorney General Robert Shevin that the commission intervene in the proliferating options industry in the Miami-Ft. Lauderdale area.
The CFTC director of enforcement, John A. Field, said his staff plans to monitor every commodity office in those two cities for the next month to insure compliance with the six-month-old options regulations, which require segregating in U.S. escrow accounts 90 per cent of customer funds sent to London, Registration, capitalization and sales rules also will be enforced.
The Miami Herald reported recently that high-pressure sales operations in Broward and Dade counties have deluged residents around the country with telephone calls promising inexperienced investors quick profits in London commodity options.
The Herald report said at least two salesmen whose licenses had been suspended by the Florida real estate commission now are operating in options sales under registrations approved by the CFTC.
The sales forces reportedly solicit customers in all 50 states, but concentrate their efforts on Midwesterners.
A commodity option is the right to buy or sell a commodity future or cash commodity at a set price at some date in the future. To make a profit on an option, the price of the futures contract or commodity must rise or fall substantially above or below the price it traded at at the time of the options purchase.
In a separate action, a Boston-based commodity options firm asked a federal court in New York to overturn the CFTC's denial of its registration. The agency has been battling the firm in and out of court for the past 18 months in an attempt to halt its sales operations.
In arguments before the Second Circuit U.S. Court of Appeals in Manhattan, attorneys for Lloyd Carr & Co. asked the court to order the agency to give it status as a futures commission merchant, the equivalent of a securities industry broker-dealer.
The panel of judges are not expected to rule on the appeal for several weeks.