Commodity Futures Trading Commission (CFTC) has fined NinjaTrader Clearing, LLC (NTC) $983,425 for failing to adequately supervise employee handling of accounts linked to a fraudulent case.
Fraudulent Account Handling
According to the CFTC, the Illinois-based futures commission merchant failed to exercise due diligence in overseeing employee actions in managing suspected fraudulent accounts. A statutory restraining order required NinjaTrader to freeze or restrict these accounts immediately, yet the firm reportedly did not act promptly.
The watchdog mentioned that this oversight resulted in open positions losing over $200,000 in value, compounding the financial damage from the fraudulent schemes. Central to the matter, CFTC mentioned that the company did not implement sufficient policies and procedures for handling such emergencies.
From late 2020 onwards, NinjaTrader reportedly failed to develop proper protocols for dealing with court orders affecting the flagged accounts. Despite receiving the SRO in January 2022, the regulator claims the firm allowed the suspected accounts to remain active.
Penalties and Restitution
As part of the settlement , the CFTC fined NTC a civil monetary penalty of $750,000. In addition, the firm must pay $233,425 in restitution, which will be distributed to fraud victims. Meanwhile, the CFTC fined Nasdaq Futures, formerly a designated contract market (DCM), $22 million last month for regulatory breaches involving its incentive programs.
In the official announcement, the commodities regulator mentioned that Nasdaq Futures operated as a DCM focusing on energy futures contracts from July 2015 to July 2018. During this period, the firm implemented an incentive program known as the DMM program.
Although Nasdaq Futures publicly disclosed a fixed stipend for market makers, the CFTC said it failed to disclose a volume-based component that informed payments to select users as per the relevant regulation. The regulator’s finding added that Nasdaq Futures provided false information when questioned.
