Saturday, October 31, 2020

CFTC Orders ADM Investor Services Inc. to Pay a $250,000 Penalty to Settle Charges that it Failed to Supervise Its Employees

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The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against ADM Investor Services Inc. (ADMIS), a registered futures commission merchant located in Chicago, Illinois.

The Order requires ADMIS to pay a civil monetary penalty of $250,000 and cease and desist from any further violations of the Commodity Exchange Act or CFTC Regulations.

The Order finds that from at least December 1, 2014, to September 24, 2017, ADMIS failed to supervise the handling of commodity interest accounts carried by ADMIS and introduced by an ADMIS-guaranteed introducing broker (GIB).

Read More: CFTC Orders Former Hedge Fund Portfolio Manager to Pay More than $700,000 in Monetary Sanctions for Fraudulently Mismarking Swaps

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In particular, the Order finds that ADMIS had a supervisory system in place as evidenced by its compliance manual; nevertheless, ADMIS failed to adequately supervise its employees and agents to ensure they:

(1) executed bunched orders that properly segregated the GIB’s proprietary trades from its customer trades;

(2) executed bunched orders that properly segregated trades from discretionary and non-discretionary GIB customer accounts; and

(3) executed orders for non-discretionary GIB customers only when the GIB had obtained specific customer authorization for the transaction.

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CFTC Division of Enforcement staff members responsible for this case are James Deacon, Kara Mucha, Kevin Samuel, James H. Holl III, and Rick Glaser.

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