CFTC sues MBF for not segregating funds

JP Morgan

The CFTC sued the MBF Clearing Corp., accusing them of violating the Commodity Exchange Act by failing to properly segregate customer accounts. MBF buys and sells commodities futures contracts. From September 2008 to March 2010, MBF employees deposited $30 million to $60 million in customer funds into a US government money market fund at JP Morgan, the complaint said.

MBF did not properly title the funds, and provisions were not in compliance with CFTC regulations, the complaint said. The account did not have proper documentation, it said. The Commission requested to bar MBF’s “unlawful acts and practices,” and instate civil penalties.

According to the CFTC, MBF had $57.2 million in customer funds on February 10. On March 4, MBF’s customer account contained no money, according to the CFTC.

MBF’s president, Mark B. Fisher, told Bloomberg Press that the firm “invested customer segregated money in a U.S. government money market fund in the strongest bank in the world, JP Morgan.” Fisher said the CFTC’s complaint acknowledges that JP Morgan told MBF on account statements that the account was a “Commodity Customer Segregated Bank Account.”

Read more abou the lawsuit.

Photo credit: Rebecca Wilson

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About the Author

Felix Shipkevich
Mr. Shipkevich’s practice focuses on regulatory, transactional, and enforcement matters in the fields of futures, commodities, and derivatives. He works with Futures Commission Merchants (FCMs), Retail Forex Exchange Dealers (RFEDs), Introducing Brokers (IBs), Commodity Pool Operators (CPOs), Commodity Trading Advisors (CTAs), Swap Dealers (SDs), Swap Execution Facilities (SEFs), and domestic and offshore hedge funds. Mr. Shipkevich guides clients on procedures related to registration with the U.S. Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), as well as domestic and international regulators in local jurisdictions. Mr. Shipkevich prepares and helps implement compliance, anti-money laundering (AML), and Electronic Trading Systems (ETS) procedures for clients in the commodities and derivatives fields.

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