The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and settling charges against Interactive Brokers LLC (Interactive), a futures commission merchant based in Greenwich, Conn., for filing inaccurate large trader reports and failing to diligently supervise the handling and reporting of accounts.
The CFTC order, filed on July 25, 2012, requires Interactive to pay a $700,000 civil monetary penalty and prohibits Interactive from violating Section 4g of the Commodity Exchange Act and CFTC Regulations 17.00, 17.01, and 166.3, as charged.
The CFTC order finds that from in or about January 2008 to at least January 2012, Interactive repeatedly failed to aggregate positions for related accounts that it reported to the CFTC in its daily large trader submissions. Interactive primarily supervised the aggregation aspect of its large trader reporting using an automated system that lacked functionality sufficient to aggregate accounts owned and/or controlled by the same traders, according to the order.
Moreover, Interactive failed to take reasonable steps to correct its automated system after it learned that the system was repeatedly failing to identify and aggregate related accounts, the order finds.
According to the order, Interactive also failed to file updated Form 102s when large traders opened related accounts or changed information concerning their trading accounts. The CFTC requires futures commission merchants, such as Interactive, to submit Form 102s identifying account holders and entities excising trading control over certain accounts in order to evaluate potential market risks. Interactive failed to supervise the employees responsible for submitting Form 102s because Interactive did not instruct them to submit updated Form 102s to the CFTC and did not provide a means by which its employees could determine when an updated Form 102 was required, the order finds.
CFTC staff responsible for this case are Lindsey Evans, Margaret M. Sweet, Cynthia Cannon, Mary Beth Spear, Ava M. Gould, Scott Williamson, Rosemary Hollinger, and Richard Wagner.