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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Commodity Futures Trading Commission (CFTC) has announced that it has filed a civil enforcement action in the U.S. District Court for the Southern District of New York against eFloorTrade, LLC (eFloorTrade) and its majority owner and sole principal John Moore, charging them with recordkeeping and supervision failures and charging Moore with making false and misleading statements of material fact, or omitting material facts, in sworn testimony before the CFTC.
eFloorTrade, headquartered in Orlando, Florida, is registered with the CFTC as an Introducing Broker, and Moore, also of Orlando, is registered with the CFTC as an Associated Person of eFloorTrade.
This isn’t the first time Moore and eFloorTrade have been in hot water with regulators. eFloorTrade and Moore paid a $45,000 fine to the NFA in 2015, relating to anti-money laundering issues.
The CFTC Complaint alleges that from October 2010 to at least October 2015, eFloorTrade failed to keep and produce for inspection full, complete, and systematic records of all transactions relating to its business in dealing in commodity interests.
According to the Complaint, eFloorTrade failed to keep and produce for inspection the trading instructions it electronically received for customers who subscribed to third party trading systems for which eFloorTrade provided execution services. The Complaint further alleges that eFloorTrade also failed to prepare a written record of the customer orders that it placed (filled, unfilled, or cancelled) as a result of the trading instructions received. In addition, the Complaint alleges that eFloorTrade failed to keep all emails relating to its business of dealing in commodity interest transactions.
According to the Complaint, eFloorTrade and Moore failed to diligently supervise the handling of customers’ trading accounts by eFloorTrade employees and agents. The Complaint alleges that eFloorTrade and Moore failed to ensure that policies and procedures were in place to make and keep books and records that eFloorTrade is required to make and keep as a CFTC registrant and failed to adopt adequate procedures on how to handle its customers’ margin deficiencies. These supervision failures, according to the Complaint, also contributed to recordkeeping violations of the Commodity Exchange Act (CEA) and CFTC Regulations described above.
Further, according to the Complaint, on September 18, 2015, Moore knew or reasonably should have known that certain of his statements to the CFTC while testifying under oath were false and misleading. The Complaint alleges that Moore falsely testified that he, or another eFloorTrade employee working under his direct supervision, created and maintained spreadsheets relating to trades executed on behalf of customers whose orders were generated from trading instructions received from third party trading system providers. However, as the Complaint also alleges, EFT made or kept no such records, as Moore and EFT, through counsel, later admitted.
The Complaint seeks relief including disgorgement, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the CEA and CFTC Regulations, as charged.
More on the CFTC action against eFloorTrade and John Moore can be seen here.