NFA Fines Multiple Firms for Failing to Maintain Audit Trails of Bunch Customer Order Allocations

The NFA fined four commodity trading advisors ("CTAs"), one futures commission merchant ("FCM") and their respective associated persons separately for failing to maintain "objective and specific" audit trails of bunched customer order allocations.

According to the NFA, the firms' audit trails were not specific enough to permit independent verification of the fairness of the allocations, nor were they sufficient to demonstrate that the firms used a defined methodology. Specifically, the complaints alleged that the firms failed to enact required procedures regarding allocations from bunched customer orders.

Additionally, the NFA found that the associated persons failed to supervise the firms' trading operations diligently, lacked the "enforcement of a firm policy prohibiting associated persons from holding accounts at other futures commission merchants" and failed "to list branch offices in a timely manner."

See: NFA Complaint: McVean Trading Investments LLC; NFA Decision: McVean Trading Investments LLC; NFA Complaint: CDM Investment Management LLC; NFA Decision: CDM Investment Management LLC; NFA Complaint: BLS AG Futures LLC; NFA Decision: BLS AG Futures LLC; NFA Complaint: Wharton Asset Management LLC; NFA Decision: Wharton Asset Management LLC; NFA Complaint; K&M Trading, LLC; NFA Decision: K&M Trading, LLC.