An introducing broker ("IB"), its president and an associated person ("AP") settled NFA charges of misusing customer block order information in a trading scheme.
The NFA determined that the IB and its president did not "uphold high standards of commercial honor and just and equitable principles of trade" in accordance with NFA Compliance Rule 2-4. According to the Complaint, the president misused customers' information in connection with block trades that he intermediated on their behalf, and allegedly failed to disclose that his personal company, a proprietary trading firm, was the counterparty to their block trades. The IB touted itself as a "neutral intermediary" that acted as a broker.
According to the Decision:
(i) the IB will pay $200,000;
(ii) the president will be suspended from NFA associate membership until January 3, 2022; and
(iii) the IB will establish and implement procedures to address the alleged violations.
The NFA action and sanctions follow sanctions imposed on respondents by ICE Futures for the same conduct, totaling $550,000 in fines, $300,000 in disgorgement, and trading bans ranging from nine months to five years.
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