Chicago, IL – E*TRADE Securities LLC and E*TRADE Clearing LLC have been slapped with a $280,000 penalty by the U.S. Commodity Futures Trading Commission (CFTC) for failing to comply with record-keeping rules and adequately supervise their operations, according to an order issued January 26, 2017.
The CFTC found that between October 2009 and January 25, 2014, E*TRADE Securities did not maintain crucial audit trail logs for its customers. E*TRADE Clearing, after becoming registered as a Futures Commission Merchant in February 2013, similarly failed to preserve these logs.
These failures constitute violations of Section 4g(a) of the Commodity Exchange Act (CEA) and CFTC Regulations 1.31 and 1.35. The CFTC also determined that both entities violated CFTC Regulation 166.3 by neglecting to establish policies and procedures to ensure record retention, despite a prior warning from their vendor about the issue.
As part of the settlement, E*TRADE Securities and E*TRADE Clearing must jointly pay the $280,000 civil monetary penalty and cease any further violations of the CEA. The companies are also mandated to overhaul their recordkeeping procedures, including updating policies, and providing comprehensive training to staff on CEA recordkeeping requirements.
The CFTC acknowledged the cooperation of E*TRADE Securities and E*TRADE Clearing throughout the investigation. The case was led by CFTC Division of Enforcement staff members Aimée Latimer-Zayets, A. Daniel Ullman II, and Paul G. Hayeck.
Source: CFTC.gov
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