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ARTICLE · 23 JUNE 2021

Broker And Founder Settle CFTC Charges For Misappropriating Customer Information

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An introducing broker and its founder settled CFTC charges for misappropriating inside information and paying brokerage kickbacks.

United StatesFinance and Banking
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
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An introducing broker and its founder settled CFTC charges for misappropriating inside information and paying brokerage kickbacks.

According to the Order (the facts of which were admitted), the respondents, who were in the business of acting as a voice broker to facilitate block trades in energy products, misappropriated customer block trade information. The CFTC said the voice brokers disclosed the information to another trader, who then executed fictitious, non-arm's-length block trades in the founder's proprietary trading account. The CFTC stated that the respondents also defrauded an energy company customer of the firm by paying kickbacks to certain of the customer's traders, who would direct brokerage business to the respondents in exchange for a portion of the commissions charged to their company.

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