A CFTC-registered introducing broker settled NFA charges for failing to maintain complete records and allowing an unregistered individual to operate as an associated person ("AP").
As described in the Complaint, NFA found that the firm (i) failed to record its branch office APs' oral communications and SMS text messages and (ii) permanently deleted, in at least eight instances, an AP's chat messages, in violation of NFA Compliance Rule 2-10(a) ("Recordkeeping"). In addition, the firm's CEO was not a registered AP, in violation of NFA Bylaw 301(b) ("Registration of Associates").
NFA stated that that firm's supervisory deficiencies violated NFA Compliance Rule 2-9(a) ("Supervision"), including that the firm:
- did not wholly capture chat communications for monitoring;
- reviewed only two percent of its non-flagged messages, when its written procedures specified 20 percent;
- did not monitor brokers' phones; and
- did not have procedures in place to monitor its branch offices and did not conduct on-site branch inspections for two years.
To settle the charges, the firm agreed to a (i) $140,000 fine and (ii) various undertakings.
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