NFA Fines XFA Introducing Broker $100,000 For Compliance Violations
Today the National Futures Association announced it ordered X-Change Financial Access, LLC. (XFA) Introducing Broker based in Chicago a $100,000 penalty for lack of “adequate supervisory procedures” to monitor and prevent violations of NFA Member Responsibility Action (MRA). Full Press Release below,
“The Decision, issued by NFA’s Business Conduct Committee (BCC), is based on a Complaint issued by the BCC and a settlement offer submitted by XFA. The BCC found that XFA, while registered as a futures commission merchant (FCM), failed to have adequate supervisory procedures to monitor for, and detect, unusual allocation activity and to prevent violations of a Member Responsibility Action issued by NFA. The BCC also found that XFA failed to maintain adequate and complete records.
In December 2015, XFA was also ordered by NFA’s BCC to pay a $75,000 fine and withdraw as an FCM for failing to supervise its operations and failing to establish, maintain and adequately enforce a risk management program. See the 2015 Complaint and Decision.”
According to the NFA’s Business Conduct Committee (BCC), while acting as an executive broker for futures and securities trades on the CME, Chicago Board of Trade, and Chicago Board Options Exchange, XFA was registered as a Futures Commission Merchant and failed to comply with NFA Compliance Rule 2-9(a) which states adequate supervisory procedures must be in place to monitory and prevent violations of MRA. Jonathan M. Hansen and his firm, Newport Private Capital LLC were acting as a third party Commodity Trading Advisor (CTA) for XFA’s futures accounts and held liable for MRA violations. Hansen and his associates failed to comply with MRA orders by set 2014 deadlines and has since been prohibited from trading.
The BCC also took into consideration a separate CFTC order against XFA, including registration matters. NFA Compliance Rule 2-10(a) “requires a member to mantain adequate books and records necessary and appropiate to conduct its business including, without limitation, the records required to be kept under CFTC regulations 1.18, 1.32 through 1.37, 1.68, and 1.71 for the period required under 1.31.”
Naturally CFTC regulation violations or any other proceeding may be used by the NFA in the terms of disciplinary actions. The complaint brought against XFA may disqualify registration under the Commodity Exchange Act.
The complete text of the 2018 Complaint and Decision can be viewed on NFA’s website.
