Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and simultaneously settling charges against Tenco, Inc. (Tenco), a registered futures commission merchant (FCM) located in Chicago, Ill., for failing to diligently supervise its employees and agents and for placing trades without proper authorization from the account holder.
The CFTC order imposes a $140,000 civil monetary penalty, requires Tenco to implement compliance and training programs to detect and prevent violations, and requires Tenco to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations as alleged.
The order finds that a floor broker, who cleared trades at Tenco, opened a trading account in the name of one of his telephone clerk’s brother-in-law and allowed the telephone clerk, without proper authorization from the account holder, to exercise discretionary authority over the account. The order finds that the telephone clerk, a Tenco employee, placed trades in a customer’s account without proper authorization in violation of CFTC regulation 166.2, for which Tenco is responsible.
The order also finds that in February 2010, a telephone clerk of Tenco’s brought allegations to the Tenco President that telephone clerks of Tenco were trading in a Floor Broker’s personal account and a telephone clerk was trading his brother-in-law’s account. The order finds Tenco did not have adequate compliance programs in place regarding the opening of new accounts to avoid the opening of the telephone clerk’s brother-in-law account as an accommodation to the Floor Broker.
Further, the order also finds that Tenco was unaware the telephone clerks were trading in the Floor Broker’s personal account and failed to take any affirmative steps to determine the validity of the allegations regarding the trading of the telephone clerks when brought to Tenco’s attention. The order finds that Tenco did not have a system in place to train employees in CFTC regulations, exchange rules or corporate policies, and thereby failed to diligently supervise the employees and accounts in issue. The order also finds that Tenco violated CFTC regulation 166.3 for failing to diligently supervise or have compliance programs in place to detect or prevent these acts.
The CFTC thanks the CME Group for its assistance in this matter.
The CFTC Division of Enforcement staff members responsible for this case are Andrew Ridenour, Jessica Harris, Kenneth McCracken, Rick Glaser and Richard Wagner.