Receiver’s Final Status Report for Customers of Nations Investments, LLC
Litigation Update
On July 11, 2008, the Receiver filed his Motion to Approve Receiver’s Final Report and to Authorize Final Distribution and Winding Up of Receivership (“Motion”) Motion to Approve Final Report wherein the Receiver detailed the results of his resolution of litigation with the former principals of Nations Investments, LLC (“Nations”) and the Commodity Futures Trading Commission (“CFTC”). The Motion also provided information regarding the Receiver’s settlement with Open E Cry, LLC for the payment of $68,100.00 to the Receiver in exchange for the bulk transfer by Nations of all of its commodity customers. The Court approved the Receiver’s Final Report (“Report”) and entered an Order on August 25, 2008 granting the Motion Order Approving Final Report.
On August 25, 2008, the Court entered a Consent Order of Permanent Injunction, Civil Monetary Penalty and Other Equitable Relief (“Consent Judgment”) Consent Judgement Order which resolved all issues among the CFTC, the Receiver, and the former principals of Nations. Among other things, that Consent Judgment contains (i) findings of fact and conclusions of law regarding the former principals’ liability to the CFTC and Receiver; (ii) an injunction prohibiting the former principals from engaging in any commodity trading; (iii) a requirement that Sal Husain and Manny Husain pay restitution in the amount of $3,900,000 of which $400,000 shall be paid to the Receiver; and (iv) an imposition of a civil monetary penalty against Sal Husain and Manny Husain in the amount of $500,000 each.
Wind-up of Receivership
In October 2008, subsequent to the approval of the Report, the Receiver began making the Final Distribution to the customers of Nations, pro rata, based upon the customer account balances that existed when the NFA directed Nations to liquidate the customer positions (the “Liquidation Date”). The Receiver has now distributed all funds available to him for customers from the cash turned over to the Receiver and from recoveries from the former principals of Nations ($400,000.00 discussed above) and Open E Cry ($68,100.00 discussed above). Coupled with the Interim Distribution made in March 2008, customers will have received approximately 39.5% of their account balances as of August 17, 2007. No further or other distributions will be forthcoming, unless Sal Husain and/or Manny Husain make any restitution payments.
Tax Information
The Receiver previously distributed W-2 and 1099 statements to the Company’s employees and customers for 2007. There will be no additional tax reporting. Based upon (i) the previously provided W-2 and 1099 statements, (ii) the account balances as of the Liquidation Date, and (iii) the amount of the distribution received from the Receiver in respect of those account balances, each customer should have sufficient information to complete any further or additional tax filings. Please consult your tax professional with additional questions.
Conclusion
Barring future recovery from the former principals of Nations in respect to the restitution obligations (in the event the CFTC successfully collects any of the Consent Judgment, the Receiver will distribute those funds), the Receiver has concluded his obligations in respect to the receivership. No further communications will be made or posted on the Nations Investments, LLC website, which site will remain up through April 30, 2009.
11-06-08.