CFTC Secures Over $2.8 Million Judgment Against Systematic Alpha Management and Owner for Trade Allocation Fraud

The Commodity Futures Trading Commission (CFTC) announced that the U.S. District Court for the Southern District of Florida has entered a consent order against Systematic Alpha Management LLC, a registered commodity trading advisor (CTA) and commodity pool operator (CPO), and its owner, Peter Kambolin. The federal court order requires the defendants to pay more than $2.8 million to resolve allegations of defrauding commodity pool participants. This total includes $1,208,503 in restitution for injured participants and $1,633,119 in disgorgement. In addition, Jersey City Partners LLC, a New York entity owned by Kambolin that received a portion of the illicit proceeds, was held jointly liable for $701,647 of the disgorgement amount. According to the court findings, between January 2019 and November 2021, Systematic Alpha Management and Kambolin marketed trading strategies involving exchange-traded cryptocurrency and foreign exchange (FX) futures. The defendants operated at least two commodity pools while executing trades across both the pools and their own proprietary accounts. Instead of adhering to regulatory requirements mandating fair and equitable allocation of customer trades, the defendants engaged in improper trade allocation. Profitable trades were consistently directed to proprietary accounts, while losing or less profitable positions were assigned to the commodity pools, resulting in more than $1.2 million in customer losses. The defendants also misrepresented to participants that the pools would focus primarily on cryptocurrency and FX futures. Under the terms of the consent order, Kambolin and Systematic Alpha Management are permanently barred from registering with the CFTC and from engaging in any activities requiring registration. They are also prohibited from trading commodity interests for their personal accounts for a period of six years. The regulatory action follows a parallel criminal proceeding brought by the U.S. Department of Justice Fraud Section in September 2023. Kambolin pleaded guilty to one count of conspiracy to commit commodities fraud in connection with the same scheme. In January 2024, he was sentenced to two years in federal prison followed by 18 months of home confinement, and was ordered to pay $1.2 million in restitution alongside $1.63 million in criminal forfeiture.