In three separate cases, two futures commission merchants ("FCMs") (see here and here and see here) settled CFTC charges related to improperly bunching orders, unauthorized trading and failing to diligently supervise.
According to the Orders, employees of the FCMs Vision Financial Markets LLC ("Vision") and ADM Investor Services, Inc. ("ADM") (i) accepted bunched orders from their GIB that commingled, both discretionary and non-discretionary, proprietary and customer trades, and (ii) executed bunched orders for the GIB's non-discretionary customers, without customer authorization.
Additionally, the CFTC alleged that two associated persons ("APs") of the GIB Essex Futures (i) improperly submitted bunched orders to FCMs that also commingled discretionary with non-discretionary, and proprietary with customer trades, (ii) exercised trading discretion over some customers' accounts without authorization, and (iii) failed to timely notify NFA of when APs left, transferred customer funds to FCMs, or publicly identified a branch office.
Vision agreed to pay a $200,000 civil monetary penalty.
ADM agreed to pay a $250,000 civil monetary penalty.
The two APs of the GIB agreed to pay jointly $500,000.
Commentary / Bob Zwirb
Aside from violations of several CFTC rules, the Orders found the respondents not to be adhering to their own Compliance Manuals, which expressly bar them from engaging in the complained practices. The matters illustrate the importance of complying not only with CFTC requirements but also with those of a regulated entity's own Compliance Manual, failure of which will be cited and used against a respondent as evidence of wrongful conduct.
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