The Commodity Futures Trading Commission (CFTC) settled charges against Illinois-based Cunningham Commodities, LLC for failing to supervise accounts set up by an introducing broker whose activities it guaranteed (GIB).
The CFTC filed an order to settle the charges which requires Cunningham Commodities to pay a $250,000 civil monetary.
The CFTC order also states that Cunningham Commodities is liable for any restitution or obligations against the GIB in any related CFTC proceeding concerning the GIB’s conduct during the period of the guarantee, in an amount bellow $640,000.
The CFTC found that Cunningham Commodities’ did not supervise the GIB accounts over a sixteen-month period diligently. Moreover, the company entered into the guarantee with the GIB despite knowing that the GIB offered a “trading program” to customers when it was not registered as a commodity trading advisor and that the majority of customers lost money under the GIB’s trading program. Many of those customers were senior citizens and any of the traded accounts were retirement accounts.
The National Futures Association said:
[GIB] used misleading and deceptive solicitations and communications to entice investment in a program that the firm know[s] has consistently lost money for substantially all customers.
However, Cunningham Commodities had not made adequate response to this statement. The company required the GIB to record its solicitation calls, but never listened to them, even as customer accounts continued to fall in value.
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