The United States National Futures Association (NFA) today highlighted again the importance of its members meeting capital requirements.
The NFA announced that it has permanently barred CC Trading Company LLC (CC Trading), an NFA Member introducing broker located in New York, from membership and from acting as a principal of an NFA Member.
The decision of an NFA Hearing Panel is based on a Complaint authorized by NFA’s Business Conduct Committee (BCC) on March 18, 2015, and a settlement offer submitted by CC Trading.
The Complaint refers to an exam of CC Trading that commenced in June 2014. The exam found that CC Trading failed to maintain required minimum adjusted net capital and failed to keep accurate financial records.
Under the NFA rules, an introducing broker should maintain a minimum adjusted net capital (ANC) of $45,000. The NFA exam identified that the firm had misclassified funds held in a trading account which it maintained at an FCM (futures commission merchant). Since March 2013, this trading account held approximately $50,000 which the FCM treated as security for trades placed by an AP of CC Trading. As such, these funds were not readily available to CC Trading.
Under CFTC Regulations, CC Trading could only treat one-half of the value of these funds as a current asset. Reclassifying half the value of the funds as a non-current asset meant that CC Trading was below its minimum ANC requirement from at least January to mid-September 2014.
In addition, the Complaint alleged that CC Trading failed to cooperate with NFA, willfully submitted misleading information to the regulator, and failed to adequately supervise the firm’s operations.
This is not the first such violation for the firm, as in September 2011, the BCC issued its first Complaint against CC Trading and Christopher Craddock, a principal and registered associated person of CC Trading. Back then, the firm also allegedly failed to maintain required minimum adjusted net capital and failed to keep accurate financial records. The Hearing Panel ordered CC Trading and Mr Craddock to pay a $15,000 fine.
You can view the full announcement from the NFA by clicking here.