The US Commodity Futures Trading Commission (CFTC) has announced today that it has filed charges against ten commodity trading advisors (CTAs). These charges are for the failure to obtain and maintain a membership within a registered futures association (RFA), as is mandated by the regulations of the CFTC.
The Suspects Charged
In order to comply with this provision, it mandates that all registered CTAs obtain a membership within the National Futures Association (NFA). The NFA stands as the only RFA currently registered within the CFTC.
As for who violated the CFTC regulations, the list are as follows: New York Resident, Amgad Gayed Attai, California-based Adale LLC, California-based CWE USA LLC, Iowa resident Obie Lee Cole, Indiana-based Griggs Research & Consulting Inc, Illinois resident Suanne Fay Goldman, Georgia-based Lewis Futures Management LLC, Maryland-based JPR Inc, Nevada resident Weilian Shao, as well as New York.
The Importance Of RFAs
James McDonald stands as the Director For the Enforcement Division and gave a statement about the matter. He highlighted what a critical role the NFA plays when it comes to CFTC registrant oversight, as it’s the sole RFA within the US, at this time. However, he stated that the NFA can only do its part if the registrants actually submit to the jurisdictional requirements it demands.
McDonald assured that the CFTC would preserve the NFA’s ability to carry out oversight, as well as ensure compliance with those that try to skirt these rules. Through these important requirements, McDonald highlighted how the public is better protected alongside a better-served derivatives market.
The complaint accuses those charged of violating Regulation 170.17 of the CFTC, mandating that all registered CTAs to become a member, and remain one, of at least one RFA. While there are exceptions, those that are exempted must be eligible to do so.
Failing To Be Properly Regulated
Through the failure to maintain a membership with the NFA, the only available RFA, as well as failing to assert a valid exemption of membership from it, those charged had improperly avoided the self-regulation of the industry. The NFA stands responsible for certain aspects of CTA and other futures entities’ regulations, under the oversight of the CFTC.
This includes examining the financial condition, qualifications, retail sales practices, proficiency, as well as business conduct of a respective CTA. Without a membership with the NFA, the self-regulating body had no jurisdiction to perform various vital self-regulatory functions when it comes to those that were charged.