Introducing Broker Penalized For Failure To Stop Improper Trade Allocations

An introducing broker and two principals settled charges for failing to supervise employees' handling of accounts owned or controlled by an associated person ("AP") of a commodity trading advisor ("CTA") and commodity pool operator. The supervisory issues led to a failure to detect post-execution trade allocation activity that favored the accounts of the CTA. The respondents agreed to pay $300,000 to the CFTC and $200,000 to the National Futures Association ("NFA") to settle the charges.

According to the CFTC Order, Global Asset Advisors LLC ("GAA") and Glenn A. Swanson, a principal of GAA, reportedly failed to (i) enforce compliance with directives pertaining to CTA's submission of allocation instructions and (ii) supervise the GAA AP in processing the CTA's bunched orders. The CFTC asserted that the CTA engaged in an unlawful post-execution allocation scheme that ultimately benefited the CTA and hurt its customers. In particular, the CFTC alleged that the CTA