ITASCA, IL – Cunningham Commodities, LLC, a registered futures commission merchant based in Itasca, Illinois, has been slapped with a $250,000 penalty by the Commodity Futures Trading Commission (CFTC) for failing to adequately supervise accounts managed by an introducing broker (GIB). The CFTC issued an order detailing the charges and settlement on June 29, 2020.
The order mandates that Cunningham Commodities cease and desist from any further violations of the Commodity Exchange Act or CFTC regulations. Furthermore, the firm is liable for restitution or disgorgement obligations imposed on the GIB, up to a maximum of $640,000, stemming from any related CFTC enforcement actions concerning the GIB’s activities during the sixteen-month period of the guarantee.
According to the CFTC, Cunningham Commodities’ oversight of accounts introduced by the GIB was demonstrably lacking. The firm entered into a guarantee agreement with the GIB despite knowing the broker offered a trading program without being registered as a commodity trading advisor. Records indicate the vast majority of customers utilizing this program lost money, and a significant portion of those customers were senior citizens with retirement accounts.
The CFTC order reveals that Cunningham Commodities was alerted to concerns raised by the National Futures Association regarding the GIB’s “misleading and deceptive solicitations” and the program’s consistent losses. Despite this knowledge, the firm failed to take appropriate corrective action. Cunningham Commodities required the GIB to record its sales calls but did not review them, even as customer accounts continued to suffer losses.
The CFTC’s Division of Enforcement, led by Ashley J. Burden, Joseph J. Patrick, Elizabeth M. Streit, Scott R. Williamson, and Robert T. Howell, conducted the investigation, with contributions from the Division of Swap Dealer & Intermediary Oversight. The case highlights the critical importance of diligent supervision of introducing brokers and protecting vulnerable investors.
Source: CFTC.gov
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