The U.S. Commodity Futures Trading Commission (CFTC) has announced that the U.S. District Court for the Southern District of Florida ordered Systematic Alpha Management LLC and its owner Peter Kambolin to pay more than $2.8 million for defrauding participants in commodity pools.
The case highlights serious misconduct in the allocation of trades and misrepresentation of investment strategies, further underscoring the regulator’s commitment to protecting investors from abusive practices.
Fraudulent Trade Allocation Scheme
Between January 2019 and November 2021, Systematic Alpha Management marketed itself as a commodity trading advisor and commodity pool operator offering strategies in exchange-traded cryptocurrency and foreign exchange (FX) futures.
The firm operated at least two commodity pools but executed trades alongside proprietary accounts controlled by Kambolin. According to court findings, profitable trades were directed to proprietary accounts while losses and less profitable trades were assigned to the pools, defrauding investors of more than $1.2 million.
This practice violated CFTC rules requiring fair and equitable allocation of customer trades.
Financial Penalties
Under the consent order, the defendants must pay:
- $1,208,503 in restitution to defrauded pool participants
- $1,633,119 in disgorgement of ill-gotten gains
Additionally, Jersey City Partners LLC, a New York firm owned by Kambolin that received some of the misallocated profits, was held jointly liable for $701,647 of the disgorgement.
The order also permanently bars Systematic Alpha Management and Kambolin from registering with the CFTC, and prohibits them from trading commodity interests for their own accounts for six years.
Related Criminal Proceedings
The case was closely tied to a criminal prosecution. In September 2023, the U.S. Department of Justice charged Kambolin with conspiracy to commit commodities fraud.
- Kambolin pleaded guilty.
- In January 2024, he was sentenced to two years in prison, followed by 18 months of home confinement.
- He was also ordered to pay $1.63 million in criminal forfeiture and $1.2 million in restitution.
International Cooperation
The CFTC credited the Fraud Section of the DOJ, the FDIC Office of Inspector General, and several international regulators—including authorities in Latvia, Germany, the British Virgin Islands, and the United Kingdom—for assisting with the case.
Broader Implications
The case underscores ongoing risks in the alternative investment sector, particularly among commodity pool operators marketing cryptocurrency and FX strategies. Regulators continue to warn that misallocation of trades and misrepresentation of strategies are recurring themes in enforcement actions.
For investors, the judgment reinforces the need for due diligence and awareness of red flags such as opaque trade allocation practices and inconsistent strategy disclosures.
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