17 C.F.R. § 4.41

Advertising by commodity pool operators, commodity trading advisors, and the principals thereof

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(a) No commodity pool operator, commodity trading advisor, or any principal thereof, may advertise in a manner which:

(1) Employs any device, scheme or artifice to defraud any participant or client or prospective participant or client;

(2) Involves any transaction, practice or course of business which operates as a fraud or deceit upon any participant or client or any prospective participant or client; or

(3) Refers to any testimonial, unless the advertisement or sales literature providing the testimonial prominently discloses:

(i) That the testimonial may not be representative of the experience of other clients;

(ii) That the testimonial is no guarantee of future performance or success; and

(iii) If, more than a nominal sum is paid, the fact that it is a paid testimonial.

(b)(1) No person may present the performance of any simulated or hypothetical commodity interest account, transaction in a commodity interest or series of transactions in a commodity interest of a commodity pool operator, commodity trading advisor, or any principal thereof, unless such performance is accompanied by one of the following:

(i) The following statement: “These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown.” ; or

(ii) A statement prescribed pursuant to rules promulgated by a registered futures association pursuant to section 17(j) of the Act.

(2) If the presentation of such simulated or hypothetical performance is other than oral, the prescribed statement must be prominently disclosed and in immediate proximity to the simulated or hypothetical performance being presented.

(1) To any publication, distribution or broadcast of any report, letter, circular, memorandum, publication, writing, advertisement or other literature or advice, whether by electronic media or otherwise, including information provided via internet or e-mail, the texts of standardized oral presentations and of radio, television, seminar or similar mass media presentations; and

(2) Regardless of whether the commodity pool operator or commodity trading advisor is exempt from registration under the Act.

(Approved by the Office of Management and Budget under control number 3038-0005) [46 FR 26013, May 8, 1981, as amended at 46 FR 63035, Dec. 30, 1981; 60 FR 38192, July 25, 1995; 72 FR 8109, Feb. 23, 2007]

Notes of Decisions

Cited in 18 cases (3 in the last 5 years), 1998–2024 · leading case: Commodity Futures Trading Comm'n, Cross v. Anthony Vartuli, Defendant-Appellant-Cross-Appellee, Avco Fin. Corp., J. Michael Gent, 228 F.3d 94 (2d Cir. 2000).

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Commodity Futures Trading Comm'n, Cross v. Anthony Vartuli, Defendant-Appellant-Cross-Appellee, Avco Fin. Corp., J. Michael Gent, 228 F.3d 94 (2d Cir. 2000). · cites it 9× “§ 6o (1) and 17 C.F.R. § 4.41 (a). Id. at 119 . It further held that AVCO had failed to accompany the hypothetical performance statistics used in its promotional materials with the warning required by 17 C.”

Commodity Futures Trading Comm'n v. Heffernan, 245 F. Supp. 2d 1276 (S.D. Ga. 2003). · cites it 16× “§ 6o (1)(A) & (B) by employing a scheme to defraud a client and engaging in a practice or course of business that operated as a fraud upon a client, while acting as a Commodity Trade Advisor (“CTA”), and (3) violated 17 C.F.R. § 4.41 (a) (2000), by advertising in a manner that…”

U.S. Commodity Futures Trading Comm'n v. Hall, 49 F. Supp. 3d 444 (M.D.N.C. 2014). · cites it 12× “§ 6 (m)(1), and Federal Regulations, 17 C.F.R. § 4.41 (a)(3) and 17 C.F.R. § 4.”

Commodity Futures Trading Comm'n v. AVCO Fin. Corp., 28 F. Supp. 2d 104 (S.D.N.Y. 1998). · cites it 4× “§§ 6b & 6o of the Commodity Exchange Act (“CEA”), and 17 C.F.R. § 4.41 of the Commission’s regulations promulgated thereunder (the “Regulations”).”

Commodities Futures Trading Comm'n v. Heffernan, 274 F. Supp. 2d 1375 (S.D. Ga. 2003). · cites it 5× “§ 6o (1)(A); (2) 17 C.F.R. § 4.41 (a)(1); (3) 17 C.F.R. § 4.”

United States Commodity Futures Trading Comm'n v. Kratville, 796 F.3d 873 (8th Cir. 2015). “§ 60 (1) (2006) and 17 C.F.R. § 4.41 (2010); committed fraud in connection with options, in violation of 7 U.”

U.S. Commodity Futures Trading Comm'n v. Arrington, 998 F. Supp. 2d 847 (D. Neb. 2014). · cites it 3× “§ 6o(1) and 17 C.F.R. § 4.41 . To succeed on this claim, the CFTC must demonstrate that Kratville committed fraud as an associated person (“AP”) of a commodity pool operator (“CPO”).”

U.S. Commodity Futures Trading Comm'n v. Allied Markets LLC, 371 F. Supp. 3d 1035 (M.D. Fla. 2019). · cites it 2× “mails or any means or instrumentality of interstate commerce, directly or indirectly," "to employ any device, scheme, or artifice to defraud any client or participant or prospective client or participant," or "to engage in any transaction, practice, or course of business which…”

Commodity Futures Trading Comm'n v. Wall Street Underground, Inc., 281 F. Supp. 2d 1260 (D. Kan. 2003). “41(a), 17 C.F.R. § 4.41 (a) (2002), by misrepresenting and failing to disclose material facts and by conducting a business practice (e.”

Commodity Trend Serv., Inc. v. Commodity Futures Trading Comm'n, 233 F.3d 981 (7th Cir. 2000). · cites it 6× “After considering CTS’s arguments, the district court found that the registration requirements of the CEA as applied to an impersonal advisor such as CTS are a prior restraint that violates the Constitution.”

Commodities Future Trading Comm'n v. Wall Street Underground, Inc., 221 F.R.D. 554 (D. Kan. 2004). “41(a), 17 C.F.R. § 4.41 (a). On July 15, 2003, plaintiff attempted to serve defendant by leaving a copy of the summons and complaint with Barbara Williams at 1828 University Place, Sarasota, Florida.”

U.S. Commodity Futures Trading Comm'n v. Hall, 632 F. App'x 111 (4th Cir. 2015). “§ 6m(l) (2012), and its regulations, 17 C.F.R. § 4.41 (a)(3), (b)(1) (2015). The district court adopted the recommendation of the magistrate judge, granted summary judgment to CFTC, and imposed a permanent injunction and a monetary penalty in the amount of $210,000.”

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— 17 C.F.R. § 4.41(a)(9) — 1 case

Commodity Trend Serv., Inc. v. Commodity Futures Trading Comm'n, 233 F.3d 981 (7th Cir. 2000). “After considering CTS’s arguments, the district court found that the registration requirements of the CEA as applied to an impersonal advisor such as CTS are a prior restraint that violates the Constitution.”

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