CFTC Fines CPO for Registration and Reporting Violations

The CFTC fined Hope Advisors LLC ("HAL") for acting as a CPO without registering with the CFTC and for failing to show all of the CFTC-required information in monthly statements provided to pool participants.

The CFTC Order ("Order") found that HAL operated Hope Investments LLC ("HIL") as a commodity pool without registering with the CFTC as a CPO.

Additionally, the CFTC found that HAL violated CFTC Rule 4.22(d), which requires that commodity pool statements report both realized and unrealized gains and losses, by providing monthly reporting statements to HIL participants that showed only realized gains and losses.

Although the pool was formed with the assistance of outside legal counsel, neither its counsel nor its principal were aware of CEA Section 4m(1)'s requirement that the operator was required to register as a CPO. The pool also took remedial action to correct the monthly pool statements that it sent to pool participants by retaining a consultant who designed a compliant performance report that HAL now sends to participants each month.

The Order also states that as of August 2013, HAL began issuing two monthly reports to HIL participants – the first of which shows realized gains and losses, and the second of which, based on net asset value, shows realized and unrealized gains and losses that comply with the specific CFTC reporting regulations. According to the Order, no customers were injured by any of the previous omissions.

The CFTC fined HAL $100,000.

See: CFTC Order.