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Abstract:The Commodity Futures Trading Commission (CFTC) has penalized NinjaTrader Clearing, LLC (NTC) with a fine of $983,425 for failing to adequately supervise its employees in handling accounts tied to fraudulent activities.
The Commodity Futures Trading Commission (CFTC) has penalized NinjaTrader Clearing, LLC (NTC) with a fine of $983,425 for failing to adequately supervise its employees in handling accounts tied to fraudulent activities. The Illinois-based futures commission merchant was found to have neglected its responsibility to oversee these accounts, which were flagged due to suspicion of fraud.
According to the CFTC, NinjaTrader did not act swiftly when it was ordered by a statutory restraining order (SRO) to freeze or restrict the affected accounts. The company's delay in taking action allowed the accounts to continue trading, resulting in additional losses exceeding $200,000 from open positions, further aggravating the financial damage linked to the fraudulent operations.
The regulator cited the lack of proper internal controls and emergency response procedures as a major factor in the failure. Beginning in late 2020, NinjaTrader reportedly did not put in place effective measures to manage court orders involving flagged accounts. Even after receiving the SRO in January 2022, the firm allowed the suspect accounts to remain active, contributing to ongoing financial losses.
As part of the settlement, NTC agreed to pay a civil fine of $750,000 and an additional $233,425 in restitution. This restitution will be allocated to victims who were affected by the fraudulent activities connected to the case.
This enforcement follows a similar regulatory action by the CFTC, which recently fined Nasdaq Futures $22 million for violations tied to its incentive programs. Nasdaq Futures, a former designated contract market (DCM) that operated between July 2015 and July 2018, offered an incentive program called the DMM (Designated Market Maker) program.
Although the firm disclosed a fixed stipend for market makers, the CFTC found that it failed to properly disclose a volume-based payment structure that rewarded certain users, thereby violating regulations. Additionally, the regulator noted that Nasdaq Futures provided inaccurate information during its inquiries into the matter.
These recent penalties reflect the CFTC's ongoing efforts to enforce compliance in the commodities and futures markets. By holding firms accountable for lapses in oversight and transparency, the regulator aims to maintain the integrity of the financial system and protect investors from harmful practices.
Market participants are urged to remain compliant and ensure that their operational procedures align with regulatory standards to avoid similar enforcement actions in the future.
Disclaimer:
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