Chicago, IL – Glenn A. Swanson, principal and registered Associated Person at Global Asset Advisors LLC d/b/a Daniels Trading (GAA), will pay a $300,000 penalty to settle charges brought by the Commodity Futures Trading Commission (CFTC) for failing to adequately supervise the handling of customer accounts and for record-keeping violations. The CFTC issued an order simultaneously filing and settling the charges against both Swanson and GAA on September 17, 2018.
The investigation, spanning from at least January 2013 to February 2014, revealed that a client of GAA – a registered commodity pool operator and commodity trading advisor (CTA) – engaged in an illegal post-execution allocation scheme. This scheme involved disproportionately allocating profitable trades to accounts with the CTA’s or associates’ proprietary interest, while assigning unprofitable or less profitable trades to customer or pool accounts.
While aware of potentially manipulative practices—noted by the Futures Commission Merchant (FCM) regarding delayed allocation instructions—Swanson directed the CTA to submit allocations within 30-60 minutes of trade execution, or by 4:00 p.m. Central time. However, the CFTC found that neither Swanson nor other supervisory personnel at GAA took further action to verify compliance, review allocation methodology, or follow up with the CTA or FCM.
Despite the CTA continuing to submit late allocations, GAA personnel continued to transmit those instructions to the FCM. Furthermore, even after the National Futures Association issued regulatory actions against the CTA—including a prohibition on soliciting funds and a complete trading ban—GAA facilitated the opening of a new account in the CTA’s spouse’s name. The CTA did not have a power of attorney authorizing trades in this account.
The GAA Associated Person knowingly processed withdrawals and executed trades in the spouse’s account despite the trading ban and in violation of GAA policy. Swanson and other supervisory personnel were reportedly aware of the relationship between the CTA and the spouse’s account. The CFTC noted that GAA lacked a system to monitor accounts owned or operated by the CTA during this period.
As part of the settlement, GAA and Swanson, jointly and severally, are required to pay the $300,000 penalty and cease any further violations of the Commodity Exchange Act and CFTC Regulations.
Source: CFTC.gov
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