CFTC Fines Firm for Reporting and Recordkeeping Violations, Supervision Failures, and Improper Investment of Customer-Segregated Funds

The CFTC issued an order that filed and simultaneously settled charges against a registered Futures Commission Merchant ("FCM") for failing to invest customer segregated funds properly, to prepare and file accurate financial reports, and to maintain required books and records, among other things.

According to the CFTC Order, Deutsche Bank Securities Inc. ("DBSI") failed to compute accurately the amount of customer funds on deposit for the period from June 18, 2012 through August 15, 2012. As a result of the miscalculations, DBSI's investment of customer funds in certain money-market mutual funds during that period are alleged to have exceeded the 50% asset-based concentration limit for such investments. Additionally, the Order states that DBSI failed to create and maintain complete and systematic records for a number of the block trades it executed. The CFTC also found that DBSI did not have an automated processes in place to ensure the accuracy of the firm's financial reporting.

According to the CFTC, while none of the violations resulted in any customer losses, each of these violations was the result of DBSI's failure to maintain adequate controls and systems, which reflected a lack of supervision over its business as a CFTC registrant. The Order requires DBSI to pay a $3 million civil monetary penalty and to cease and desist from violating the relevant CFTC regulations.

See: Order Regarding Deutsche Bank Securities Inc.; CFTC Rules 1.10, 1.25, 1.35 and 166.3.