CFTC gives no quarter to FCMs

Last week litigation and enforcement matters took top billing in incidents impacting global financial services firms. Among other things, the U.S. Commodity Futures Trading Commission fined two different entities of one global investment bank for violations of its rules related to the handling of customer funds and position limits. In addition, a High Court in the United Kingdom struck down a proposed rule of the London Metal Exchange aimed at helping lower prices of aluminum worldwide which some claim have been artificially inflated because of long waiting times at warehouses to retrieve the widely-used commercial metal.

As a result, the following matters are covered on this week’s Gary DeWaal’s Bridging the Week:

  • CFTC Fines Two Morgan Stanley Entities over Inadvertent Deficiencies in Its Handling of Customer Funds and Position Limit Violations (includes My View);
  • UK High Court Sets Aside LME Proposed Rule Aimed to Reduce Waiting Time at Approved Warehouses to Withdraw Metals in order to Reduce Aluminum Prices to Commercial Clients and Consumers;
  • Principal MF Global Officers Again Fail at Effort to Dismiss a Lawsuit against Them;
  • FCStone Prevails in Action by Sentinel Management Litigation Trustee to Recapture Funds Paid to the FCM for Its Customers; Separately, Former Sentinel CEO Convicted in Fraud Scheme;
  • FINRA Fines LPL Financial US $950,000 for Not Having Adequate Supervisory System Related to Its Sale of Alternative Investments;
  • CFTC Sets FCM Outside Auditor Independence Standards;
  • CFTC Extends for an Additional Month No-Action Relief Previously Granted SGX related to Swaps Clearing for US Customers;
  • CFTC Extends Until June 30 Authority of LCH.Clearnet to Provide Clearing Services for Nodal Exchange Contracts without being fully Qualified as a DCO for Such Clearing; and
  • ESMA Publishes Updated Q&As related to the AIFMD as well as ETFs and UCITs.

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