CFTC Orders E*TRADE Securities, Clearing to Pay $280K for Supervisory Failures

The US Commodity Futures Trading Commission (CFTC) has issued an order simultaneously filing and settling charges against brokerage group E*TRADE Securities LLC, and subsidiary E*TRADE Clearing LLC, a Futures Commission Merchant (FCM), for their non-compliance with applicable record-keeping rules, according to a regulatory filing.

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The nature of the order stems from a combination of supervisory shortcomings and non-compliance with existing record-keeping rules for FCMs. Both entities agreed to a settlement of a $280,000 Civil Monetary Penalty for the aforementioned violations.

The CFTC Order found that between October 2009 and January 25, 2014, E*TRADE Securities did not properly preserve and maintain requisite audit trail logs for their client base. E*TRADE Clearing also did not maintain customer audit trail logs after becoming registered as an FCM in February 2013.

In particular, the order found that by not maintaining these records, E*TRADE Securities and E*TRADE Clearing violated specific sections of the Commodity Exchange Act (CEA) as well as CFTC Regulations (1.31 and 1.35). Consequently, the CFTC Order required both E*TRADE Securities and E*TRADE Clearing to jointly to pay a $280,000 civil monetary penalty and to cease and desist from further violations of the CEA.