10 May AtoZForex, Vilnius - Yesterday, the Commodity Futures Trading Commission (CFTC) announced an order filing and issued charges against Cunningham Commodities LLC. As CFTC fines Cunningham Commodities $150,000. Cunningham Commodities LLC is an authorized FCM located in Chicago.
The company provides futures and options trading services to clients through its CTS platform (Cunningham Trading System) and has over $70 million in segregated funds as reported on their website. The CFTC fines Cunningham Commodities and the controller, Salvatore Carmen Russo of Wheaton, Illinois, a monetary penalty of $150,000. According to the press release on 9th of May, the Order found that Cunningham violated CFTC’s regulations which:
1). Requires FCM to instantly report to the CFTC any shortage in its customers’ segregated account;
2). Requires FCM to deliver Large Trader Reports of traders, whose accounts are carried by the FCM on a daily basis.
What exactly happened?
As CFTC fines Cunningham Commodities, the Order discovered that the financial entity violated CFTC Regulations. When Cunningham Commodities did not directly report to the CFTC of an overnight deficiency about the $3.4 million in its segregated customer account. This came as a result of an operational cash transfer error at the firm on 10th of March 2014. As reported in the Order, Cunningham instantly fixed the error the next morning, but it failed to inform the CFTC about the deficiency until 12th of March, 2014.
At the same time, the CME’s audit committee informed Cunningham that about $5 million discrepancy between the amount in the segregated customer account and the reported amount.
Insights on the controller
Furthermore, the Order discovered that the controller of the company, Salvatore Carmen Russo, targeted and supported the firm’s reporting violation by trying to hide the shortage and not reporting it immediately to the CFTC.
As reported by the National Futures Association (NFA), Russo was imminent as a principal with the firm at the beginning of 2013 yet that pending status was annulled mid-2013.
Additionally, the CFTC Order reported an unrelated violation of the company. As a third party software dealer was quoted as failing in proper set up of the trading tools for reporting. It includes client positions in Comex silver futures and soybean options between 2013 and 2014, respectively.
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