NFA fines introducing broker for minimum capital violations

North America’s notoriously stringent regulatory authority the National Futures Association (NFA) has responded to a settlement offer from introducing broker company Ascona Management by issuing a $20,000 monetary penalty to conclude a case which the NFA brought against the firm in April this year relating to mandatory minimum capital requirements.

According to the filing by NFA, Ascona Management had failed to maintain the required minimum adjusted net capital, as well as having failedg to file a telegraphic notice with NFA, as well as withdrawing capital after which the firm fell under its equity withdrawal restriction. Additionally, the NFA’s complaint charged company director Andrew Keller with failing to diligently supervise Ascona’s financial operations.

The NFA’s original complaint cited that Ascona Management LLC was headed by registered Commodity Trading Advisor (CTA) Mr. Keller, who although is an NFA member, is located in Geneva, Switzerland.

The NFA stated that in nearly every instance, Ascona fell below its minimum adjusted net capital requirement after withdrawing capital to pay “consulting fees” to Keller. After these withdrawals of capital were made, Ascona also fell below its Equity Withdrawal Restriction.

In addition, Ascona Management failed to immediately file notice with NFA when its adjusted net capital sum fell below the required minimum amount. Usually, Ascona Management would not file the required notice until after NFA notified the firm of its capital deficiencies. Ascona Management would then deposit the required funds to meet its capital requirement and file notice with NFA.


Whilst this complaint was leveled at both Mr. Keller and Ascona Management, the first reply to the NFA was a corporate one, dated May 2, 2014, issued to NFA by Mr. Keller, pleading that although he has had difficulties in maintaining capital compliance, the NFA is, in his opinion, incorrect in deeming payments to Mr. Keller as being capital withdrawals.

Mr. Keller asserted that he had been an upstanding member of the NFA and had operated in the futures industry for over 20 years, and in the instances that he may have had capital adequacy difficulties, he has made this up by funding the deficit with his own money.

He asserts that he should not be punished for remunerating himself on a basis that he considers to be normal practice and perfectly legal, and pleaded with the NFA not to punish or fine him.

Mr. Keller submitted six months of correspondance between himself and the NFA in order to demonstrate his good character and his ability to cooperate with the NFA’s increasingly difficult demands, however the NFA proceeded to issue a penalty of $20,000 following an offer of settlement issued jointly by Ascona Management and Mr. Keller.

The penalty has been divided into four monthly payments of $5000, the first of which must be paid in full by be due on October 15,2014 and the remaining monthly payments shall be due on the
fifteenth day of the succeeding three months.

This decision shall operate to bar any future Member Responsibility Actions or Business Conduct Committee Complaints against Ascona Management and Mr. Keller for any conduct occurring prior to the date of its offer, of which NFA had corporate knowledge and shall resolve and terminate all complaints, investigations and audits relating to Ascona Management and Mr. Keller, which were pending as of the date of its Offer.

In addition, Ascona Management and Mr. Keller’s offer and this decision shall not be used as a sole basis for any other action or proceeding by NFA against Ascona Mangagement and Mr. Keller, including any registration matter, except Ascona and Keller’s Offer and this Decision may be used in an action to enforce their terms or in a subsequent disciplinary action or regulatory action against Ascona Management or Mr. Keller, where they may be considered as disciplinary history and evidence in aggravation on the issue of sanctions.

To view the case history, click here

Read Also: