The US Commodity Futures Trading Commission has taken a civil enforcement action in the US District Court for the Eastern District of Virginia, charging Tate Street Trading of Richmond in Virginia with misappropriating customers' funds and fraudulent solicitation in connection with a commodity pool.

A commodity pool is a private investment structure -  a pool of funds - that combines investors' contributions and uses them to trade on futures and commodities markets. It is managed and operated by a designated commodity pool operator who is licensed by the National Futures Association and registered with the CFTC. All investors share in the profits or losses of the pool according to the amounts that they contribute to it. Commodity pools tend to be structured as limited partnerships, although not in this case.

Tate Street was a commodity pool because it was operated for the purpose of trading in commodity interests, including commodity futures contracts and options on commodity futures contracts.

Between 2009 and 2019 Tate Street Trading and its principal, Leonard Cipolla of Chesterfield in Virginia, fraudulently solicited and received about $7 million from at least 42 HNW individuals in connection with pooled trades in commodity futures contracts and options thereon. They misappropriated about $4,573,000 of this money for business expenses, personal use and to make Ponzi-like payments to other pool participants. They also misled the HNWs and did not ask the CFTC, as was their obligation, to register them as a commodity trading advisor. The CFTC says that they broke the Commodity Exchange Act, which it administers.

The defendant(s) promised pool participants a fixed rate of return over a period of months or years. Cipolla pled guilty to mail fraud and acting as an unregistered commodity pool operator in court recently.