CFTC Settles Charges Against FCM For Supervisory Failures

The CFTC settled charges against a futures commission merchant ("FCM") for failing to adequately supervise the processing of customer fees for trading and clearing Chicago Mercantile Exchange products. The CFTC determined that the FCM:

• failed to implement and maintain adequate systems for reconciling the amounts in invoices from exchange clearinghouses with those of fees charged to customers through its back-office accounting software;
• failed to pass fee discounts and exchange rebates on to customers; and
• consequently, overcharged customers in an aggregate amount of approximately $1.1 million.

The CFTC order required the FCM to pay an $800,000 civil monetary penalty, and to cease and desist from violating the CFTC regulation that governs diligent supervision. In a recent press release, the CFTC noted that this action is the second it has brought against a clearing firm for supervisory failures over fee processing.