NFA updates case against Diamond Head Capital, but permanent ban still stands

The United States National Futures Association (NFA) yesterday formally announced that it has ordered Diamond Head Capital LLC, an NFA Member commodity trading advisor located in Orlando, Florida, to permanently withdraw from NFA membership.

The NFA also recently fined Orlando-based NFA Member introducing broker eFloorTrade LLC, John A. Moore, the sole principal of both firms, and Christopher T. Moore, an associated person of both firms, each $15,000, amounting to a total of $45,000 as detailed by LeapRate last week.

At that time, LeapRate reported that the NFA had intended to censure Diamond Head Capital LLC for failing to diligently supervise the firm’s operations and employees. The NFA has now concluded that there were no findings against Diamond Head Capital regarding failure to supervise, but the decision to ban the company from NFA membership still stands.

The decision, issued by an NFA Hearing Panel, is based on a complaint authorized by the NFA’s Business Conduct Committee on Dec. 31, 2013, and a settlement offer submitted by Diamond Head, eFloorTrade, and John and Christopher Moore. The Hearing Panel found that eFloorTrade and Christopher Moore engaged in unauthorized trading in an effort to avoid margin calls. The Hearing Panel also found that eFloorTrade did business with a non-Member of the NFA that was required to register with the CFTC. Finally, the Hearing Panel found that eFloorTrade and John Moore failed to diligently supervise the firm’s operations and employees.

The supervisory shortcomings alleged in the complaint included a repeated failure to detect suspicious activity, a failure to implement adequate procedures to verify the identity of customers and whether customers were required to be CFTC-registered and an NFA Members, and a failure to ensure that books and records were correct.

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