NFA charges CTA in continued crackdown on deceptive investment promotions

The National Future Association’s (NFA) Business Conduct Committee issued a complaint last week against registered commodity trading adviser (CTA) Chad Streifel with having reason to believe that NFA requirements are being, have been, or are about to be violated.

Allegations suggest that Mr. Streifel was a sole proprietor CTA and NFA Member located in White City, Saskatchewan, Canada. Thus, as an NFA Member, Streifel is required to comply with NFA requirements and is subject to disciplinary proceedings for violations thereof.

Mr. Streifel’s background reveals that he became registered as a CTA NFA Member on December 12,2014. Streifel is his firm’s sole listed principal and only employee. It looks like he become registered after an incident ln November 2011, when the Saskatchewan Financial Services Commission cited Streifel for soliciting, advising, and trading for FX managed account customers without being registered.

Related NFA news:  Regulatory purge on deceptive marketing continues as NFA goes after 28-year established firm

So what NFA violations is Mr. Streifel cited for?

1 . NFA Compliance Rule 2-29(b)(1) provides that no Member or Associate shall use any promotional material which is likely to deceive the public.

2 . NFA Compliance Rule 2-29(b)(3) provides that no Member or Associate shall use any promotional material which mentions the possibility of profit unless accompanied by an equally prominent statement of the risk of loss.

  • According to the official NFA document released, the NFA conducted a Google search of Mr. Streifel and discovered a blog which he maintained to advertise his CTA trading program that promoted Streifel as a “registered CTA” and encouraged people to invest their capital in managed accounts to trade commodities.
  • His program promised that his trading would “profit hundreds of millions of dollars and use those profits for researching immortality.” He also claimed that his trading program would “profit millions, if not billions.”
  • The NFA had a staff member in its Enhanced Surveillance Program pose as a customer in an effort to receive a sales solicitation from Streifel to determine if his sales practices complied with NFA Requirements.
  • The NFA staff member had a telephone conversation, and exchanged a number of e-mails, with Streifel. During these communications, Streifel emphasized the huge profit potential of trading commodities and currencies. ln many of these communications, Streifel made absolutely no mention of risk of loss, while in others he significantly downplayed the risk of loss by claiming that he could “reduce the amount of risk involved so that there is no risk and multiple opportunities to make 5-10% on some trades that might last as long as a week.”

ln all, Streifel’s promotional blog and sales solicitations were deceptive, misleading, and unbalanced in that they emphasized the profit potential of trading while either making no mention of risk of loss or significantly downplaying the risk of loss.

By reason of the foregoing acts and omissions, Streifel is charged with violations of NFA Compliance Rules 2-29(b)(1) and (b)3) which are listed above.

Mr. Striefel must now file a written answer to the complaint with the NFA within thirty (30) days of the date of the complaint. He is at risk of losing NFA membership either permanently or temporarily, being censured or reprimanded, also a monetary fine can be levied not to exceed more than $250k for each violation, and an order to cease and desist or any other fitting penalty or remedial action not inconsistent with these penalties.

To view the official document from this case, click here (PDF).

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