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Screenshot of a breaking news alert e-mail from Q2 2017
The United States National Futures Association (NFA) today announces that it has permanently barred Portfolio Managers, Inc. (PMI), an introducing broker that used to offer FX and futures trading, from membership. The main reason for the decision are deceptive and high-pressure sales solicitations.
The NFA has also imposed penalties on PMI’s Los Angeles office associated persons Christopher M. Hogan and Thomas G. Heneghan – they are both permanently barred from NFA membership and from acting as principals of an NFA member. PMI’s sole principal Amanda L. Murphy was barred from NFA membership and from acting as an NFA member principal for four years. The same restriction goes for PMI’s LA branch office AP Andrey A. Zhukov – he is barred for three years.
The decisions stem from a Complaint authorized by NFA’s Business Conduct Committee (BCC) on December 21, 2015, and a settlement offer submitted by PMI and Ms Murphy.
NFA’s review has shown that between October 2012 and August 2015 all but two of PMI’s LA branch office’s 68 customers lost money, with the losses totaling about $1.2 million. The customers paid over $660,000 in commissions. Also, many of these accounts had commission to equity ratios equal to or exceeding 20% and traded both outright long options and option spreads, which is an indicator of abusive trading practices.
The NFA determined that the LA branch routinely used high-pressure sales tactics and made materially misleading and deceptive statements during sales solicitations to customers.
For instance, Mr Heneghan frequently downplayed commissions as “low or minor,” when, in fact, they were relatively high commissions – $60 to $75 per round-turn trade.
Heneghan also frequently claimed that he could minimize losses and risk while at the same time promising customers huge profit potential. Such claims had no basis in fact as 97% of PMI’s LA branch customers and 98% of Heneghan’s customers suffered net losses and on average lost 94% of their total investment.
The NFA found that PMI and Ms Murphy failed to supervise PMI’s operations and its APs’ sales practices, whereas Mr Hogan provided NFA with materially false and misleading information, and failed to diligently supervise the operations and employees of PMI.
You can view the NFA announcement by clicking here.