FCM and IBs Settle CFTC Charges for Net Capital Deficiencies

A futures commission merchant ("FCM") and four introducing brokers ("IBs") settled CFTC charges for failure to meet minimum net capital requirements, in violation of Section 4f(b) of the Commodity Exchange Act and CFTC Rule 1.17(a)(1)(iii).

In separately announced settled enforcement actions (see here and here), the CFTC charged (1) a New York-based FCM (see order here) and a related London-based IB (see order here) and (2) a Houston-based IB (see order here), a Chicago-based IB (see order here) and a London-based IB (see order here). In each case, the CFTC found that the relevant firm failed to correctly deduct from its adjusted net capital the amount of guarantees of revolving lines of credit that it provided to an affiliated company.

To settle the charges, the FCM agreed to (i) cease and desist from future violations, (ii) pay a $250,000 civil money penalty, and (iii) comply with the undertakings within its order. To settle their charges, each of the IBs agreed to (i) cease and desist from future violations, (ii) pay a $120,000 civil money penalty, and (iii) comply with the undertakings within each of their orders.