Jacob Wohl, the teenage promotion sensation that swept the nation, has got the world on a string.
The self-proclaimed stock guru turned managed futures guru now a real estate guru, currently has his sights on the October 19 Presidential Debate. He is taking a private jet, he says paid for by a “client,” from Los Angeles to Las Vegas to watch Donald Trump, the family presidential candidate of choice, battle it out with Hillary Clinton, who has been surging in the major polls in the wake of the last debate.
Amid a regulatory furor where he recently responded to a National Futures Association inquiry by calling them “thugs,” Wohl isn’t concerned. He told ValueWalk he is being escorted in the jet by “Instagram models.” Wohl is perhaps best known for promoting a “director of fun” to entertain clients. As far as those pesky regulators nipping at his heals over missing customer funds, he said he is “not worried. It’s just a cost of doing business.”
Jacob Wohl says he is not subject to NFA investigation
Wohl was named in an August complaint by the NFA, the derivatives industry self-regulatory organization similar in scope to FINRA on the equity side of the equation. ValueWalk reported on April 16 an investigation may be underway. After receiving statements from an investor during spring that customer funds were missing, the NFA conducted an extensive search of all regulated accounts known to be controlled by Wohl and related parties.
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Working in conjunction with various brokerage compliance departments, the NFA discovered trading oddities in Wohl’s registered CTA account and that of his mother. The NFA claimed client assets were diverted into the mother’s account. The NFA sent three investigators to Wohl’s Hollywood Hills, CA home, which was listed as the business address. It is standard investigating procedure when fraud is suspected to ratchet up the investigative urgency and pressure. The NFA engages in audits of its members, including confirming performance, assets under management as well as conducting a basic business operations review.
In an October 5 response, Wohl said he “had never been engaged in a business which would mandate… any type of involvement with the National Futures Association.” The NFA regulates investments sold to the public that use derivatives.
Wohl had engaged in derivatives trading strategies on the behalf of clients and was registered under Nex Capital Management from February 16, 2016, to July 25, 2016. Wohl’s move to managed futures from stock investing was noted as being similar to switching from milk to tequila and eating the worm for protein. The NFA has the authority to investigate, fine and ban him from the industry if he is found guilty of violating its rules. If the NFA finds evidence of fraud, it can refer the case for criminal enforcement authorities to the US Department of Justice.
Jacob Wohl says regulators are “thugs” and they need more to do
Wohl, for his part, thinks the regulators are using overly aggressive tactics. “It is unclear at this point whether this saga simply represents regulators gone rogue or whether it speaks to a broader culture of harassment, stalking and thuggery at the National Futures Association,” Wohl wrote in his NFA response letter.
To support his charges, Wohl says claims NFA investigators were “peeping through the windows of his home” after Wohl was seen inside during a surprise inspection and audit. Wohl also notes that regulators drove 68 miles west to his father’s and questioned his younger brother, 17, about Jacob’s whereabouts.
“This kind of unannounced thug tactic was unbecoming of the (NFA),” Wohl wrote of investigators interrogating a minor. He stated that he would not be meeting with the NFA as they requested in their investigative complaint as a result of the “dangerous and bizarre nature” of the NFA investigators, which Wohl called “three strange men.”
The problem, Wohl says, is that regulators don’t have enough to do.
Pointing to regulatory growth that he says has “doubled or tripled” in size while the financial industry growth has remained static, Wohl thinks regulators are bored at work. “They have lawyers sitting around looking for things to do,” he told ValueWalk.
Wohl’s math might need a fact check. The proposed 2017 Commodity Futures Trading Commission’s budget is $330 million, up from $250 million the previous year. The SEC budget is $1.8 billion, up 11% from last year. The CFTC and SEC are granted a budget through a Congressional approval process. The NFA, for its part, draws its budget off a transaction fee from regulated derivatives trades. The Futures Industry Association (FIA) noted that trade volume increased 1.5% from 2013 to 2014, and in 2015 volume increased 13.5%. https://fia.org/articles/2015-fia-annual-futures-and-options-volume-survey-asia-takes-lead
For his part, Wohl indicated he has moved on from regulated investment industries. Real estate is the 18-year-old’s next industry to conquer, following in the footsteps of his political idol, Donald Trump.
“I’m learning new things,” he said. “I’m going to be announcing new products shortly.”
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