Chicago-based brokerage firm A&A Trading, Inc. has been slapped with a $400,000 penalty by the Commodity Futures Trading Commission (CFTC) for failing to report suspicious activity and adequately supervise its employees, the agency announced today.
The CFTC order requires A&A Trading to pay a $400,000 civil monetary penalty and disgorge $95,329 in profits earned through the violations. The charges stem from A&A Trading’s handling of customer accounts connected to Kooima & Kaemingk Commodities Inc. (K&K).
In May 2014, K&K alerted A&A Trading that former employee Nathan Harris had engaged in unauthorized trading in customer accounts and that K&K would cover losses for at least one affected client. K&K also expressed concerns that another customer would discover the illicit trading. This triggered a requirement for A&A Trading to file a Suspicious Activity Report (SAR) with the Financial Crimes Enforcement Network (FinCEN) within 30 days – a report the firm failed to submit, nor did it alert the CFTC.
The CFTC also found that A&A Trading neglected its supervisory duties by continuing to process unauthorized trades submitted by Harris after being informed of his misconduct. The firm allegedly disregarded clear warning signs indicating that Harris’s unauthorized trading persisted between May 5, 2014, and August 14, 2014.
“Our regulatory regime requires certain intermediaries…to monitor and report suspicious activity,” stated James McDonald, Director of the CFTC’s Division of Enforcement. “These suspicious activity reports…serve as key tools that we, together with our regulatory partners, use to identify fraud, manipulation, and other wrongdoing.”
This case is linked to the CFTC’s Bank Secrecy Act Task Force. The CFTC has previously brought enforcement actions against Harris, K&K, and its principals related to the unauthorized trading scheme. The investigation was led by CFTC staff members Nicholas Sloey, Elsie Robinson, Lauren Fulks, Chris Reed, Charles Marvine, and former staff member Peter Riggs.
Source: CFTC.gov
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