Fort Lauderdale, Florida-based Angus Partners LLC has been slapped with a $250,000 penalty by the Commodity Futures Trading Commission (CFTC) for operating as an unregistered Commodity Trading Advisor (CTA) and violating disclosure rules. The CFTC issued an order on September 29, 2016, detailing the findings of its investigation.
The agency found that since at least October 2012, Angus Partners advised more than 15 clients on over-the-counter (OTC) commodity option and swap contracts, holding itself out as a CTA without proper registration. The firm primarily served retailers of heating oil, natural gas, and other fuel products, offering fuel hedging programs designed to mitigate price risk.
According to the CFTC, Angus marketed itself as an expert in tailoring hedging strategies to individual client needs, creating the impression it would act in their best interest. However, the firm failed to adequately disclose critical conflicts of interest. Specifically, Angus acted as the counterparty to its clients’ option and swap contracts, a fact not always revealed to those clients.
The CFTC order also found that Angus embedded a markup – effectively a transaction fee – into the premium prices paid by clients for options transactions, retaining this markup without disclosure. This lack of transparency regarding both counterparty status and fees constituted a violation of CTA disclosure regulations.
In addition to the $250,000 civil monetary penalty, the CFTC has ordered Angus Partners to cease and desist from further violations of the Commodity Exchange Act’s CTA registration requirements and related regulations. The case was led by CFTC staff members Sam Wasserman, Alben Weinstein, Elizabeth May, David Acevedo, Lenel Hickson, Jr., and Manal M. Sultan of the Division of Enforcement.
Source: CFTC.gov
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