Company Settles Charges for Failing to Register as an Introducing Broker
An energy risk management company that solicited and accepted orders for swap and options transactions for its clients settled CFTC charges for failing to register as an introducing broker ("IB").
According to the Order, the company's activities included: identifying counterparties, price discovery, negotiating trades and trade execution. The CFTC found that the company did not accept any money, securities, or property to margin, guarantee, or secure these transactions. The CFTC found that the company obtained quotes for swap or option transactions from two or three potential counterparties, negotiated with the counterparties and executed transactions on a client's behalf. The CFTC said that between 2019 and 2023, the company brokered 1,663 swaps and options transactions for approximately 71 clients.
The CFTC recognized that the company provided substantial cooperation during the Division's investigation, including identifying key persons, summarizing relevant data and attempting to remediate potential violations, which "significantly conserved the time and resources of Division Staff."
The CFTC determined that the firms violated CEA Section 4d(g) ("Dealing by unregistered futures commission merchants or introducing brokers prohibited").
To settle the charges, the company agreed to (i) pay a civil monetary penalty of $100,000 and (ii) cease and desist from violating Section 4d(g).