Former New York Fund Manager Pleads Guilty in Connection with Multi-Million-Dollar Commodities Fraud Scheme | WPN World People News

Thomas Hampton, formerly the managing director of Hampton Capital Markets LLC, pleaded guilty in New York federal court to commodities fraud in connection with an investment scheme in which Hampton concealed millions of dollars in losses he incurred trading various securities, including S&P 500 futures contracts tied to the S&P 500 stock index, announced U.S. Attorney for the Southern District of New York Preet Bharara. Hampton was charged in December 2012 and pleaded guilty before U.S. Magistrate Judge James C. Francis, IV.

U.S. Attorney Bharara said, “Thomas Hampton blatantly deceived his investors in a scheme that resulted in millions of dollars in losses for scores of people. His guilty plea ensures that he will be punished for those deceptions and that, to the extent possible, his investor victims will be made whole.”

According to the charging instruments in this case and statements made in open court at the plea proceeding:

From September 2010 through September 2011, Hampton was the managing director of Hampton Capital, an Arizona limited liability company that had more than $4 million in assets under management. Hampton Capital engaged in the business of buying and selling exchange traded funds (ETFs). An ETF is an investment fund that holds assets such as stocks, commodities or bonds and typically tracks—or attempts to replicate the performance of—an underlying benchmark or index, such as the S&P 500 equities market index. Hampton Capital purported to utilize specially designed computer software to trade ETFs based on pricing inefficiencies. In his role as managing director, Hampton bought and sold various securities, including futures contracts, on behalf of Hampton Capital.

When Hampton Capital began to suffer substantial losses as a result of Hampton’s trading, he concealed those losses from investors by, among other things, falsely representing that the investments continued to earn profits. For example, Hampton provided monthly statements to investors as early as April 2011 that falsely reflected a positive return for Hampton Capital instead of disclosing the actual losses suffered. Based on his misrepresentations and omissions, Hampton Capital investors did not seek to redeem or withdraw their investments. In fact, some investors provided additional investment capital. As a result of the scheme, more than 50 investors lost millions of dollars in the aggregate.

Hampton, 44, of St. Louis, pleaded guilty to one count of commodities fraud. He faces a maximum sentence of 10 years in prison and a fine of the greater of $1 million or twice the gross gain or gross loss from the offense. In connection with his guilty plea, Hampton agreed to forfeit the illegal proceeds of his crimes and will be ordered to pay restitution to the victims of his offense.

Source: U.S. Federal Bureau of Investigation