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Category Archives: CFTC Compliance

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NFA Prohibits Funding of Retail Forex Accounts With Credit Cards

Posted in CFTC Compliance, NFA Enforcement

This week, the CFTC approved a NFA Interpretative Notice that prohibits a Member from accepting credit card payments from customers to fund retail forex accounts.  The NFA recently reviewed how customers fund their retail forex accounts and found that customers overwhelmingly funded their trading accounts using a credit card.  The NFA noted that credit cards… Continue Reading

Suspicious Activity Reports, FCMs and IBs, Is That A Marriage Made In Heaven

Posted in CFTC Compliance, Compliance and Supervision, Money Laundering

Suspicious Activity Reports (SARs) have been a useful tool for financial institutions to report financial fraud while, at the same time, prohibiting the reporting institution from disclosing the existence of a SARs in response to a third-party request.  In 2010, the Financial Crimes Enforcement Network (FinCEN), amended this regulation to extend the prohibition against disclosure… Continue Reading

NFA Studies Insuring Customer Segregated Accounts

Posted in CFTC Compliance

In the wake of several high profile failures of futures market participants, the NFA and others recently completed a study of how customer asset protection insurance (“CAPI”) would work in the futures industry.  The CAPI program would provide additional customer asset protection and limit the risk of loss to customers.  The study found that insurers… Continue Reading

CFTC Delays Vote On Swap Platforms

Posted in CFTC Compliance

In another example of regulators struggling with the general mandates of the Dodd-Frank Act, the CFTC was forced to delay a vote on establishing trading platforms for swaps.  The new trading platforms were called for by Congress to bring transparency and competition into the over-the-counter markets.  The law requires that swaps, which are currently traded over-the-counter,… Continue Reading

Energy Executives Convicted Of Sending False Reports To Industry Newsletters

Posted in CFTC Compliance, CFTC Enforcement

Its not often I write about criminal cases but this is one that all executives in the commodities industry need to know about.  In Brooks v. United States, 681 F.3d 678 (5th Cir. 2012), the Court affirmed the convictions of three executives in the natural gas industry for falsely reporting natural gas trades in violation of… Continue Reading

NFA Relaxes Certain Member Policing Requirements – For Now

Posted in CFTC Compliance, Compliance and Supervision

The NFA recently announced that it would provide a limited time relief to Bylaw 1101’s prohibition for members transacting business with unregistered persons.  NFA Bylaw 1101 prohibits an NFA member from transacting business with or on behalf of a non-member that is required to be registered with the CFTC.  Although Bylaw 1101 imposes strict liability… Continue Reading

NFA Issues Guidance to CPOs Regarding Exemptions Under Regulation 4.13(a)(4)

Posted in CFTC Compliance

As we previously reported, the CFTC issued new regulations eliminating the exemption from registration available to CPOs that offered funds solely to sophisticated investors pursuant to Regulation 4.13(a)(4).  For more information on this new CFTC regulation, click here.  Earlier today, the NFA issued a notice to members to provide guidance to CPOs who operate pursuant… Continue Reading

Volcker Rule Conformance Period Clarified

Posted in CFTC Compliance, Dodd-Frank, SEC Enforcement

The Board of Governors of the Federal Reserve, the SEC and the CFTC jointly confirmed recently that entities subject to the Volcker Rule would the have the full two year period provided by Section 619 of the Dodd-Frank Act to fully conform its activities and investments, unless the Board extends the conformance period.  Banking entities… Continue Reading

Special Committee Announces Recommendations Regarding Segregated Funds

Posted in CFTC Compliance

A special committee of representatives from the futures industry’s SROs proposed a series of recommendations for changes to SRO rules and regulatory practices.  The recommendations include:  Requiring all FCMs to file daily segregation and secured reports, which will provide SROs with an additional means to monitoring firm compliance; Requiring all FCMs to file bimonthly Segregation Investment… Continue Reading


Posted in CFTC Compliance, CFTC Enforcement, JOBS Act, Money Laundering, SEC Compliance, SEC Enforcement, Securities Legislation

The SEC and CFTC launched a working group to discuss and identify money laundering vulnerabilities.  These issues have lingered for awhile.  Both agencies believe that there is an opportunity to clarify their positions relating to money laundering and if their programs could potentially uncover such events.  This group will also include representatives from the Treasury… Continue Reading

CFTC Revises Registration and Reporting Requirements for CPOs and CTAs

Posted in CFTC Compliance, CFTC Enforcement

On February 9, 2012, the CFTC issued a final rule regarding changes to Part 4 of the CFTC’s regulations involving registration and compliance obligations for commodity pool operators (“CPO”) and commodity trading advisors (“CTA”).  Among other things, the rule rescinds the exemption from registration provided in Rule 4.13(a)(4) and sets forth additional annual reporting requirements… Continue Reading

SEC Issues guidelines for Form PF Reporting

Posted in Broker-Dealer Regulation, CFTC Compliance, CFTC Enforcement, Compliance and Supervision, Dodd-Frank, Hedge and Private Equity Funds, Investment Adviser Regulation, SEC Compliance, SEC Enforcement

The SEC published a small entity compliance guide for investment advisers relating to the new Form PF.  These new reporting requirements affect SEC registered investment advisers with at least $150 million dollars in assets under management.  Some of these new guidelines will also apply to CFTC commodity pool operators and commodity trading advisers. The SEC… Continue Reading

The NFA Clarifies Restrictions On Slippage

Posted in CFTC Compliance, NFA Enforcement

The CFTC recently adopted the NFA’s interpretative notice to NFA Compliance Rule 2-36 regarding price slippage and price re-quoting.  Rule 2-36(b)(1) prohibits a Forex Dealer Member (“FDM”) from engaging in a forex transaction that cheats, defrauds or deceives any other person.  Similarly, Rule 2-36(b)(4) prohibits an FDM from engaging in any manipulative acts or practices… Continue Reading

Investment Advisors and Broker-Dealers Use of Social Media – Beware!!

Posted in Broker-Dealer Regulation, CFTC Compliance, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Investment Adviser Regulation, SEC Compliance, SEC Enforcement, State Enforcement

Although the use of social media has been embraced by many industries, it is of particular concern for investment advisors and broker-dealers. In many situations, the use of these outlets touch upon several areas.  For investment advisors and broker-dealers, the advertising requirements under the Investment Advisors Act of 1940 and certain Securities Exchange Act of… Continue Reading

CFTC Adopts Rule To Limit Repos

Posted in CFTC Compliance

On Monday, the CFTC unanimously voted to approve a rule to prevent futures commission merchants from using customer funds for repurchase agreements.  Such agreements, commonly known as “repos”, allowed a futures firm to swap customer assets for securities, such as municipal bonds or foreign government bonds, held in another division of the firm.  The futures… Continue Reading

Swap Dealer Registration – Here It Comes

Posted in Broker-Dealer Regulation, CFTC Compliance, Compliance and Supervision, Financial Industry Trends, SEC Compliance

The Dodd-Frank Act required that security based swap dealers or major security based swap participants to register with the SEC.  These swap based entities are required to register with the SEC while all others are under the jurisdiction of the CFTC.  The SEC proposed rules requiring these entities to register electronically with the SEC on… Continue Reading

Josh Horn’s Ponzi Scheme Response Road Map

Posted in CFTC Compliance, CFTC Enforcement, Federal and State Criminal Activities, FINRA Compliance, FINRA Enforcement, NFA Enforcement, PCAOB Enforcement, SEC Compliance, SEC Enforcement, State Enforcement

My colleague, Josh Horn, has written an amazing article that should be on every compliance officer’s desk.  It details methods for investigating and responding to ponzi schemes.  In this day and age, we are met with another Ponzi scheme occurring or being uncovered almost every day.  Josh’s article is an exceptional primer since it details… Continue Reading

Securities Podcast with Ernest Badway

Posted in Broker-Dealer Regulation, CFTC Compliance, CFTC Enforcement, Compliance and Supervision, Federal and State Criminal Activities, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Hedge and Private Equity Funds, Intra-Industry Arbitrations, Investment Adviser Regulation, NFA Enforcement, PCAOB Enforcement, Public Customer Arbitrations, Registered Representatives, Sarbanes-Oxley, SEC Enforcement, Securities Class Actions, State Enforcement

Thought you might be interested in a recent podcast I did concerning my securities law practice.  http://web.me.com/cordpar/Client_Development_Tips/Law_Consulting_Coaching_Podcast/Entries/2011/10/28_Developing_a_Securities%2C_White_Collar_and_Complex_Litigation_Practice.html

The Volcker Rule: the Greatest and/or Worst Regulation Ever?

Posted in CFTC Compliance, CFTC Enforcement, Compliance and Supervision, Dodd-Frank, Financial Industry Trends, SEC Compliance, SEC Enforcement

The SEC recently joined the FDIC, the OCC and the Federal Reserve in advancing the Volcker Rule for public comment.  The Volcker Rule is shaping up to be one of Dodd-Frank’s most contentious and confusing new regulations. Volcker Rule proponents hope that it will, like the late-great Glass-Steagal Act before it, rein in risk-relishing bankers by… Continue Reading

CFTC Overwhelmed By Dodd-Frank

Posted in CFTC Compliance, Dodd-Frank

The CFTC announced earlier today that it will not complete the rule-writing process for the derivatives market until the first quarter of 2012.  Chairman Gensler stated that the CFTC is “focused on considering these rules thoughtfully – not against a clock.”  Under the Dodd-Frank Act, Congress directed the CFTC to regulate the over-the-counter derivatives market,… Continue Reading