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Cash Shortage Alleged for Huntington Beach Firm

December 24, 1985|JANE APPLEGATE | Times Staff Writer

A Huntington Beach commodities company does not have enough money to cover its customer obligations, according to a complaint filed late Monday by the Commodity Futures Trading Commission in U.S. District Court in Los Angeles.

U.S.A. Commodity Futures Inc., with offices on Center Avenue, is experiencing a shortfall of about $108,000, according to the CFTC. The complaint alleges that the company, which is registered with the CFTC, is undercapitalized and failed to properly segregate customer funds.

The commission is seeking a temporary restraining order and the appointment of a receiver to protect the remaining customer funds. A hearing on the CFTC's requests is scheduled for 10 a.m. today.

Company President Warren C. Lu could not be reached for comment and the company was not answering phone calls late Monday.

U.S.A. Commodity Futures, which bought and sold commodities for about 100 customers through the securities firm of Drexel Burnham Lambert Inc., apparently ran into trouble when one of its largest customers failed to make a margin call, according to CFTC attorneys. Margin calls require an investor to put up additional collateral to back up the loans they have taken out to buy commodities or securities.

When the one customer failed to make the required payment, Drexel liquidated all the other customer accounts, according to CFTC attorneys.

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