Washington, DC – Commodity futures broker Dean Katzelis and his firm, Essex Futures, have been slapped with a $500,000 penalty by the Commodity Futures Trading Commission (CFTC) for a series of regulatory violations spanning from January 2014 to September 2017. The CFTC issued an order detailing the charges, which include improper order handling, unauthorized trading, and inadequate supervision.
Katzelis, along with business partner Shahin Maleki operating under the name Essex Futures, improperly combined their own trades with those of their customers in “bunched orders.” This practice, transmitted to futures commission merchants for execution, obscured the distinction between proprietary and client activity. The CFTC found Essex also engaged in unauthorized trading within customer accounts, exercising discretion without proper legal documentation or specific customer authorization.
Further compounding the violations, Essex failed to maintain accurate written records of these transactions and neglected to provide requested records to the CFTC. The firm also demonstrated a systemic failure to adequately supervise its employees and agents, despite having a compliance manual in place. This lack of oversight allowed the improper order handling and unauthorized trading to continue unchecked.
The investigation revealed Essex failed to properly segregate proprietary trades from customer trades within bunched orders, and also failed to differentiate between discretionary and non-discretionary customer accounts. Additional violations included failing to report employee terminations to the National Futures Association within the required timeframe, delaying the transmission of customer checks to futures commission merchants, and failing to properly identify a branch office to the public.
As part of the settlement, Katzelis and Maleki are jointly responsible for the $500,000 civil monetary penalty and are ordered to cease and desist from any further violations of the Commodity Exchange Act (CEA) and CFTC Regulations. The case was led by CFTC Division of Enforcement staff members James Deacon, Kara Mucha, Kevin Samuel, James H. Holl III, and Rick Glaser.
Source: CFTC.gov
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