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CFTC Orders Chicago Broker To Pay Over $495,000 For Supervision Failures And Failure To Report Suspicious Activity

Date 30/09/2020

The Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against A&A Trading, Inc., a registered introducing broker located in Chicago, Illinois, for failing to file a suspicious activity report (SAR) and to diligently supervise its employees’ handling of certain customer accounts. The order requires A&A Trading to pay a civil monetary penalty of $400,000 and to disgorge $95,329 earned in connection with its violations. This action was brought in connection with the Division of Enforcement’s Bank Secrecy Act Task Force.

“Our regulatory regime requires certain intermediaries, including introducing brokers, to monitor and report suspicious activity. These suspicious activity reports—or SARs—filed with FinCEN serve as key tools that we, together with our regulatory partners, use to identify fraud, manipulation, and other wrongdoing in our markets—often at the earliest stages,” said Division of Enforcement Director James McDonald. “The CFTC will continue to hold intermediaries responsible for complying with their reporting obligations.”

Case Background

According to the order, A&A Trading assisted Kooima & Kaemingk Commodities Inc. (K&K) in connection with its handling of customer accounts. On May 5, 2014, K&K informed A&A Trading that Nathan Harris, formerly of K&K, was engaged in unauthorized trading in customer accounts and that K&K would reimburse at least one customer for losses. K&K also informed A&A Trading that it was concerned that another customer would discover the unauthorized trading. Upon learning this information, A&A Trading was required to file a SAR concerning Harris’ unauthorized trading with the Department of the Treasury’s Financial Crime Enforcement Network (FinCEN) within 30 days. A&A Trading failed to do so and did not otherwise report the violations to the CFTC. 

The order also finds that after learning Harris was engaged in unauthorized trading, A&A Trading failed in its supervisory duties by continuing to accept unauthorized trades from Harris in customer accounts.  A&A Trading also ignored warning signs that Harris’ unauthorized trading had continued between May 5, 2014 and August 14, 2014. 

The CFTC previously resolved charges against Harris, K&K, and K&K’s principals for, among other things, Harris’ unauthorized trading. [See CFTC Press Release Nos. 7803-18 and 8002-19].

The Division of Enforcement staff members responsible for this action are Nicholas Sloey, Elsie Robinson, Lauren Fulks, Chris Reed, and Charles Marvine, as well as former staff member Peter Riggs.

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