June 24, 2024

CFTC charges Three Bridges Trading Fund and its owner with fraud

On June 6, 2024, in the Western District of Tennessee, the Commodity Futures Trading Commission filed a civil enforcement action charging Tennessee corporation Three Bridges Trading Fund, LLC and Tennessee resident Donald Wray Rodgers, the company’s owner, with operating a fraudulent scheme and misappropriating $2 million from pool participants in the process.  In its complaint, the CFTC is seeking a permanent injunction against the defendants, trading and registration bans, and the payment of disgorgement, civil money penalties, and restitution.

According to the CFTC’s complaint, between January and November of 2022, Rodgers solicited and accepted funds, individually and as agent and principal of Three Bridges, for the Three Bridges Pool (“TB Pool”) while making material misrepresentations and omissions about his commodities trading and returns.  According to the CFTC, the defendants ultimately solicited and accepted $2 million from pool participants after persuading approximately 50 individuals to participate in the TB Pool.  Instead of trading all of the funds received from pool participants, as represented, Rodgers allegedly traded only a portion of pool funds and used a substantial portion for his personal use.  This led to substantial trading losses that allegedly caused Rodgers to treat pool funds in the manner of a Ponzi scheme, paying recently received funds directly to other participants as purported pool profits or withdrawals.  In furtherance of the scheme, the defendants allegedly circulated periodic account statements to the pool participants that falsely reflected profits earned from commodity futures trades.  As concerns regarding profits emerged, the defendants also allegedly issued false account statements in an attempt to convince pool participants that Three Bridges was solvent and created false trade confirmations in an effort to explain pool losses.

In addition to the fraud and misappropriation charges, the CFTC accused the defendants of comingling pool funds with non-pool assets and directing pool participants to send funds directly to Rodgers’ personal account.  The CFTC also charged Rodgers and Three Bridges for failing to receive pool funds in the name of Three Bridges and failing to operate Three Bridges as a legal entity separate from Rodgers.  Rodgers and Three Bridges are also accused of acting as commodity pool operators (“CPO”) that failed to register with the CFTC, as required, while Rodgers is additionally charged with failing to register as an Associated Person (“AP”) of the CPO.

CFTC Press Release | Complaint