Chicago, IL – On June 19, 2013, the U.S. Commodity Futures Trading Commission (CFTC) announced charges against ABN AMRO Clearing Chicago LLC for multiple financial and regulatory failings. The firm, based in Chicago, Illinois, was found to have violated several key provisions of the Commodity Exchange Act and related CFTC regulations.
The CFTC Order details that between March 19, 2009, and January 2012, ABN AMRO repeatedly failed to properly segregate or secure customer funds, resulting in three instances of under-segregated funds and one instance of under-secured funds. These violations stemmed from clerical errors and inadequate internal policies concerning customer fund movements.
A CME Group audit on May 31, 2011, revealed further issues. ABN AMRO improperly used a customer’s withdrawn warehouse receipts as collateral, leading to under-margined accounts and a subsequent failure to meet minimum net capital requirements for a single month-end. This constituted a violation of Section 4f(b) of the Commodity Exchange Act.
A limited review by the CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) in January 2012 uncovered additional shortcomings. ABN AMRO was unable to provide complete and accurate margin reports for certain account types, violating requirements for maintaining accurate books and records.
The CFTC determined that these violations were rooted in insufficient internal controls and a lack of adequate supervision over commodity interest accounts and employee activities. As a result of these findings, ABN AMRO will pay a $1 million civil monetary penalty. The firm is also subject to a cease and desist order and is required to engage an independent consultant to review and improve its internal controls and procedures.
The CFTC acknowledged the assistance of the CME Group in this matter. The case was led by Allison Baker Shealy, John Einstman, Paul G. Hayeck, and Joan Manley, with support from Kevin Piccoli, Melissa Hendrickson, Carrie Coffin, and Michael.
Source: CFTC.gov
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