The U.S. Commodity Futures Trading Commission today issued an order settling charges that LMC Asset Management, of Deerfield Beach exercised discretionary trading authority over customers’ accounts in retail, leveraged foreign currency (forex) transactions, without being registered with the CFTC as a Commodity Trading Advisor (CTA).
The CFTC order finds that from at least October 18, 2010, to at least October 21, 2011, LMC exercised discretionary trading authority over accounts of persons who were not eligible contract participants (ECPs) in forex transactions without being registered with the CFTC as a CTA. As a result of LMC’s solicitations, 36 non-ECP customers opened forex trading accounts, with deposits totaling approximately $455,155.22.
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The CFTC order requires LMC to pay a $140,000 civil monetary penalty and to cease and desist from further violations the Commodity Exchange Act and CFTC regulations, as charged. The order also prohibits LMC from entering into any commodity-related transactions, soliciting or accepting funds from any person for transactions involving commodity futures, commodity options, security futures products and/or forex contracts, and from trading or applying for registration, among other sanctions, until it has paid the civil monetary penalty.
On October 18, 2010, the CFTC enacted new regulations implementing certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the 2008 Farm Bill, regarding off-exchange retail forex transactions, including requiring CTAs to register before exercising discretionary trading authority over accounts of non-ECPs. According to the order, LMC failed to register as a CTA after October 18, 2010, as required, because it exercised discretionary trading authority over accounts of individuals who were not ECPs in connection with retail forex transactions.
The CFTC appreciates the assistance of the U.K. Financial Services Authority in this matter.