NFA Charges CTA with Supervisory and Disclosure Violations

The National Futures Association ("NFA") Business Conduct Committee filed a complaint against a commodity trading advisor and its principal for (i) allowing an unregistered individual to act as an associated person, (ii) violating recordkeeping and disclosure requirements, and (iii) failing to meet supervisory requirements.

The NFA Business Conduct Committee alleged that Ethan Mitchell LLC ("EML") and its principal, Brian Mitchell, allowed an individual, Jon Sugick, to solicit and communicate with customers on behalf of EML despite the fact that Mr. Sugick was not registered with the CFTC or the NFA. The NFA also claimed that EML filed incomplete and "materially inaccurate" disclosure documents that concealed the actual rates of return for EML's entire customer base. In addition, the NFA charged Mr. Mitchell with failing to supervise Mr. Sugick properly and allowing him to act as a sales representative despite his lack of registration status.

According to the NFA, Mr. Mitchell and EML could face penalties that include fines of up to $250 thousand for each violation, along with suspensions or expulsions.