Entity Sanctioned for Failing to Register as a Commodity Trading Adviser

An entity and its owner settled charges with the CFTC for failure to register as a commodity trading adviser ("CTA") in connection with the provision of trading signals for binary options transactions.

The U.S. District Court for the Western District of Texas entered a Consent Order stating that the entity offered customers "the ability to obtain trade signals and to automate trading on binary options platforms using those trade signals." The Court concluded that the entity violated CEA Sections 4m(1) ("Use of mails or other means or instrumentalities of interstate commerce by commodity trading advisors and commodity pool operators") and 4k(3) ("Registration of associates of futures commission merchants, commodity pool operators, and commodity trading advisors").

To settle the charges, the entity and owner agreed to (i) a prohibition from conducting CTA activities without registering with the CFTC and (ii) pay a civil monetary penalty of $100,000.

Statement

CFTC Commissioner Caroline D. Pham dissented arguing that the CFTC appears to be "changing its interpretation of the definition of [CTA] . . . without sufficient explanation and without the opportunity for the public to comment." She said that the Consent Order may be construed to expand the definition of a CTA to include technology providers that aggregate trade signals from other providers, but that do not originate trade signals themselves, which is inconsistent with prior CFTC guidance.