Fortune Trading Group, Inc. ("FTG"), an introducing broker, and its principal, Jonathan Schuler, settled NFA charges of employing harmful sales and trading practices. In addition, Ironbeam, Inc. ("Ironbeam"), a futures commission merchant which acted as FTG's guarantor, settled charges of failing to adequately supervise FTG operations.
NFA's Business Conduct Committee issued a complaint against FTG, Mr. Schuler and Ironbeam on July 11, 2017, alleging that FTG and Mr. Schuler engaged in harmful trading practices by recommending (i) low-profit, out-of-the-money option spreads to maximize commissions, and (ii) that customers offset and purchase similar spread positions. These strategies were primarily designed to increase FTG profits. In addition, NFA found that FTG used misleading and deceptive promotional materials, and otherwise solicited customers in a misleading and deceptive manner.
The NFA charged FTG, Mr. Schuler and Ironbeam with violating NFA Compliance Rules 2-2(a), 2-29(a)(1), 2-29(b)(1) and (2). Without making any admissions, the respondents submitted a joint offer to settle which will (i) permanently bar FTG from NFA membership, (ii) temporarily ban Mr. Schuler from NFA membership for five years, and (iii) require Ironbeam will pay a fine of $100,000.
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