Texas Money Manager Sued by Regulators Over Forex Fraud Claims

A Texas money manager was sued by U.S. regulators over claims that he defrauded investors in a foreign-exchange trading scheme.

Kevin G. White siphoned away about $1.7 million of the $7 million he raised from investors since September 2011 by falsely claiming his currency trading strategy yielded returns of more than 393 percent since its inception in January 2009, the Securities and Exchange Commission said in a complaint filed at federal court in Texas July 9 and unsealed late yesterday.

“White and his companies brandished phony credentials and a can’t-miss trading strategy to lure investors into a web of deceit,” David Woodcock, head of the SEC’s Fort Worth, Texas, office said in a statement. “In reality, White was suffering forex trading losses and putting investor money to other uses.”

The Commodity Futures Trading Commission filed a parallel action freezing the assets of White and his firms, KGW Capital Management LLC, Revelation Forex Fund LP and RFF GP LLC.

The SEC lawsuit was unveiled one day after Commissioner Luis Aguilar faulted the agency for failing to adopt a rule required by the 2010 Dodd-Frank Act to address abusive sales practices and risks associated with the retail foreign-exchange market. The CFTC adopted related rules in 2010.

Both agencies are seeking trading bans, disgorgement of ill-gotten gains and unspecified financial penalties.

A phone call to Kelly Crawford, the court-appointed receiver at Scheef & Stone LLP, wasn’t immediately returned. A phone call to a Plano, Texas, number listed to White wasn’t answered. The SEC said White had no known defense counsel.

Before it's here, it's on the Bloomberg Terminal.