The US National Futures Association (NFA) has filed a complaint against Harmik Iranossian, who was an NFA Associate and registered associated person (AP) of Global Futures Exchange & Trading Co., lnc. (GFET), an introducing broker located in Tarzana California.
Mr. Iranossian has been an NFA Associate and an AP of GFET since July 2010 and has not been previously employed by another NFA Member firm.
In May 2011, GFET became subject to NFA’s Enhanced Supervisory Requirements as 20% or more of its APs at the time had been previously employed by one or more Disciplined Firms. Consequently, GFET currently has a $250,000 net capital requirement, and must record all telephone calls between its APs and existing or potential customers and maintain logs of these calls.
ln July 2014, the NFA performed a limited scope examination of GFET, which included listening to a sample of recorded telephone calls between several GFET APs and existing or potential customers. During its review of the recorded calls, the NFA identified serious deficiencies with a conversation between Mr. Iranossian and a prospective customer of GFET which occurred on July 22, 2014. At the time of the conversation, the prospective customer was only nineteen years old and had no prior investment or futures trading experience.
The conversation between Mr. Iranossian and the prospective customer concerned the prospective customer’s net worth which he had listed as being less that $25,000 on an account application he had completed to open a trading account through GFET at an NFA Member futures commission merchant (FCM).
At the beginning of the conversation, the NFA states that Mr. Iranossian told the prospective customer that he wanted to determine the prospective customer’s net worth. Mr. Iranossian said that net worth was defined as “Everything you own … everything – cars, jewelry, things of that nature…” The prospective customer then itemized his assets after which Mr. Iranossian estimated the prospective customer’s net worth at around $18,000 when, in reality, the prospective customer was insolvent.
Mr. Iranossian failed to explain to the prospective customer that net worth not only included assets but also included liabilities. Therefore, when assessing the means of the prospective customer, Mr. Iranossian did not include over $20,000 in student loans or more than $1,400 in credit card debt in his net worth calculation.
Moreover, Mr Iranossian told the prospective customer to include in his net worth illiquid assets, such as shoes and clothing, and also the value of a car, which had been totally wrecked in an accident and which the prospective customer did not even own free and clear as the car was still subject to a debt to a finance company.
As an NFA Associate, Mr. Iranossian was obligated to give additional risk disclosure to the prospective customer that futures trading was too risky for him based on his apparent negative net worth, his young age, and his lack of futures trading experience. However, Mr. Iranossian failed to make this disclosure to the prospective customer. Additionally, lranossian failed to accurately define “net worth” for the prospective customer causing him to provide incorrect information and inflate his net worth on his account application.
The foregoing conduct by Mr. Iranossian fell short of the high standards of commercial honor and just and equitable principles of trade required of NFA Members and Associates, therefore by reason of the foregoing acts and omissions, Mr. Iranossian is charged with violations of NFA Compliance Rules 2-4 and 2-30.
For the official announcement from the NFA, click here.