CFTC fines Cadent Financial Services $125,000 for oversight failures

The CFTC announced today that it has filed and settled charges against Chicago-based futures commission merchant (FCM) Cadent Financial Services LLC. The FCM stood accused of failing to adequately supervise its employees and associated persons (APs) working with Cadent’s guaranteed introducing broker (GIB). The settlement includes a $125,000 civil monetary penalty and a cease and desist order.

According to the order, the Guaranteed introducing broker’s associated person unlawfully allocated trades for his own personal gain between February and October 2007. He achieved this post-execution, when he sent himself the most profitable trades, leaving the less profitable (and downright unprofitable) trades to the commodity pool and its customers.

For its part, Cadent failed to follow its own internal procedures concerning allocation of bunched orders, and did not make certain it received a post-allocation plan before the bunched orders were filled. Cadent also allowed the associated person to make allocation changes without substantial oversight, including changes in account numbers for allocations several days after a given trade. Finally, the FCM also failed to take action when a growing number of indicators pointed to wrongdoing.

Read more about this CFTC enforcement action.

Creative Commons License photo credit: Alex E. Proimos

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