The CFTC has announced that it has ordered ABN AMRO Clearing Chicago LLC to pay $1 million to settle charges against the firm. The charges include failing to segregate or secure sufficient customer funds; failing to meet the minimum net capital requirements, failure to maintain accurate books and records, and failure to supervise its employees.
According to the CFTC, between March 2009 and January 2012, ABN AMRO reported three instances of under-segregated customer funds and one instance of under-secured customer funds. The violations were the result of “clerical errors and/or a lack of adequate policies and procedures related to customer movement of funds”. The CFTC also added that during a routine CME Group audit of ABN AMRO’s books and records, the CME found that ABN AMRO “had improperly used a customer’s withdrawn warehouse receipts as collateral for margining purposes”.
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The CFTC also added that its Division of Swap Dealer and Intermediary Oversight (DSIO) Examination staff conducted a limited review of the company starting in January 2012. In that review, ABN AMRO was unable “to produce a complete and accurate margin report listing for a very limited number of certain types of accounts (e.g., omnibus accounts that offset margin requirements for certain spread transactions).”
The CFTC’s charges against ABN AMRO concluded that “each of these violations was a result of ABN AMRO’s insufficient controls, reflecting a lack of supervisory controls over commodity interest accounts and/or other activities of its partners, employees, and agents relating to its business as a Commission registrant.” Based on the violation, the CFTC is imposing a $1 million civil monetary penalty, a cease and desist order, and is requiring ABN AMRO to retain an independent consultant to review and evaluate the effectiveness of its existing internal controls and policies and procedures.