CFTC Sanctions Firm for Recordkeeping, Trade Practice and Supervision Failures

The CFTC announced an order filing and settling charges against a longtime floor broker in the soybean commodity futures pit at the Chicago Board of Trade ("CBOT"). The charges included failing to comply with applicable recordkeeping and audit trail rules, creating trading records that contained fictitious information and were submitted for clearing belatedly, engaging in unauthorized trading, and failing to supervise employees of Futures International LLC, where the broker was a principal. The CFTC also filed a complaint against Futures International LLC Chief Operating Officer for similar allegations arising from underlying facts in the CFTC order.

The CFTC order found, and the Complaint alleged, that for nearly three years, the CBOT broker communicated with his clients on a regular basis to discuss their trading intentions, but "habitually" failed to obtain or record specific order instructions from his customers. The CFTC order further found that, because the CBOT broker did not possess the power of attorney over his commercial customers' accounts, his exercise of discretion over their accounts in placing and executing trades was unauthorized under CFTC Regulations even in the absence of customer complaints.

Additionally, the CFTC found that the CBOT broker conducted futures business by instant messaging and failed to maintain full and complete records of those communications.

See: CFTC Press Release; Order; Complaint.