On December 31, 2013, the US National Futures Association (NFA) issued a complaint charging registered introducing broker eFloorTrade with failing to implement an adequate anti money laundering (AML) program, doing business with a non-Member of NFA that was required to register with the CFTC and failing to maintain adequate books and records.
The complaint also charged eFloorTrade and Christopher Moore with engaging in unauthorized trading and failing to uphold high standards of commercial honor and just and equitable principles of trade. Finally, the complaint charged John Moore, eFloorTrade and Diamond Head with failing to supervise.
As a result of this complaint, the NFA has now reached a settlement with eFloorTrade, along with John and Christopher Moore, both senior executives within the firm, in that each party should pay a $15,000 fine.
Diamond Head Capital LLC, of which Mr John Moore is registered as Principal, has been permanently banned from NFA membership.
On December 31, 2014, pursuant to a settlement offered submitted by eFloorTrade, Diamond Head, John Moore and Christopher Moore, eFloorTrade, John Moore and Christopher Moore were ordered to each pay a $15,000 fine. Christopher Moore was also ordered to tape record all conversations with existing and potential customers for one year.
Diamond Head was ordered to withdraw from NFA membership within 30 days from the date of the Decision and never reapply for NFA membership or act as a principal of an NFA Member at any time in the future.
This resolution marks and end to the case which the NFA brought about initially in early 2014 when the NFA issued a complaint alleging that eFloorTrade violated NFA Compliance Rule 2-9(c) by failing to verify the correct business address and ownership of a corporate account holder.
Secondly, the NFA’s complaint alleged that eFloorTrade violated NFA Bylaw 1 101 by doing business with a commodity pool that should have filed – but failed to file – an exemption from Commodity Futures Trading Commission (“CFTC”) registration.
In addition, the NFA asserted that eFloorTrade and Christopher Moore violated NFA Compliance Rules 2-2(a) and 2-4 by offsetting trades in customer accounts so as to liquidate enough positions to eliminate or avoid a margin call and then, a day or two later, acquiring new positions for these customer accounts that were identical to the positions that were liquidated.
Latly, the complaint charged eFloorTrade with violating NFA Compliance Rule 2-10(a) by failing to prepare correct monthly net capital computations, as well as having alleged that eFloorTrade, Diamond Head and John Moore violated NFA Compliance Rule 2-9(a) by failing to diligently supervise the firms’ operations and employees.
For the full case documentation from the NFA, click here.