November 13, 2014

CFTC Sanctions Rosenthal Collins Group for Supervision Violations

Firm Ordered to Disgorge More than $100,000 in Commissions and Pay $700,000 Civil Penalty

Washington DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against Rosenthal Collins Group, LLC (RCG), a registered Futures Commission Merchant (FCM) located in Chicago, Illinois, for failing to diligently supervise an Associated Person and for failing to provide and maintain an adequate program of supervision in violation of CFTC Regulation 166.3.

The CFTC Order requires RCG to pay a $700,000 civil monetary penalty and disgorge $104,279 in commissions it earned from the trading activity related to the supervisory failures and to cease and desist from violating CFTC Regulation 166.3, as charged.

Specifically, the Order finds that, from March 2008 through July 2013, RCG failed to diligently supervise an employee registered with RCG as an Associated Person (AP #1) in one of its Memphis, Tennessee, branch offices by allowing him to conduct business on its behalf while working entirely from the office of another CFTC registered FCM. According to the Order, the supervisor in this Memphis office did not know that RCG’s policies prohibited Associated Persons from conducting business on its behalf from an office other than RCG’s offices and, consequently, the supervisor took no action to address this violation of RCG’s policies and procedures.

The Order also finds that during the five-year period in question, AP #1 not only introduced customer accounts to RCG and earned commissions from RCG for the trades placed in the accounts, but also executed customer orders through another employee located in the same RCG branch office (AP #2). The Order finds that AP #1 arranged swap agreements for the other FCM, including orders with several cattle feedyards, and helped open new futures accounts for the feedyards at RCG. AP #2 received all commissions from RCG for trades in these feedyard accounts, but he split his commissions with AP #1 by personal check, the Order finds. The office supervisor denies being aware of this commission-sharing arrangement.

Finally, the Order finds that RCG did not provide adequate training on its company policies to this Memphis office supervisor, did not maintain a meaningful program of supervision there, and failed to enforce its own polices in violation of CFTC Regulation 166.3.

CFTC Division of Enforcement staff members responsible for this matter are Brigitte Weyls, Stephanie Reinhart, Joseph Patrick, Susan Gradman, Scott R. Williamson, and Rosemary Hollinger.

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Last Updated: November 13, 2014