The CFTC entered into a settlement agreement with a hedge fund manager that restricts his registration as an "associated person" of his hedge fund and bars him from registering in any capacity with the CFTC for the next sixteen months. The sanctions were imposed for the manager's failure to supervise an employee who was convicted of insider trading.
The CFTC Order stated that the manager consented to the findings of a January 8, 2016 SEC Order, which found that he "failed reasonably to supervise [an employee] with a view to preventing [that employee's] violation of Section 10(b) of the [Securities] Exchange Act [of 1934] and Rule 10b-5 thereunder." Among other violations, the CFTC Order highlighted the fact that the manager ignored red flags and failed to immediately investigate whether or not a portfolio manager under his supervision was engaged in unlawful insider trading conduct. The CFTC determined that the manager is consequently also subject to statutory disqualification from registration with the CFTC in any capacity pursuant to Sections 8a(3)(C) and 8a(4) of the CEA.
The CFTC Order (i) immediately restricted the manager's registration as an "associated person" of his company, and (ii) banned the manager from any activity requiring registration with the CFTC or to act as an officer or employee of any person registered or required to be registered with the CFTC until at least December 31, 2017, contemporaneous with the restriction end date that had been set forth in the SEC Order of January 8, 2016.
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