September 9, 2019
CFTC Orders Registrant to Pay $1.25 Million for Fraud, Unauthorized Trading, and Violating Speculative Position Limits in Live Cattle Futures
Washington, DC – The U.S. Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against Nathan Harris, a CFTC registrant, of Akron, Iowa, for fraud, unauthorized trading, and violating speculative position limits in live cattle futures contracts. The order imposes a civil monetary penalty of $1,250,000 and permanent restrictions on Harris’s registration with the CFTC.
CFTC Chairman Heath P. Tarbert stated: “This case shows the CFTC’s unwavering commitment to protect America’s farmers and ranchers from fraud and other misconduct in connection with the agricultural derivatives markets. The Commission will continue to work to ensure all Americans who use these markets can have confidence in their integrity.”
As noted in the order, between January 2012 and August 2014, Harris engaged in fraud and unauthorized trading by exceeding certain customers’ instructions concerning the size and risk of positions, failing to obtain specific authorization from certain customers for particular trades, and failing to obtain signed powers of attorney from certain customers. Harris’s unauthorized trading resulted in approximately $10.3 million in customer losses. Through Harris’s unauthorized trading in one customer’s account, he also exceeded CME’s live cattle spot-month limit.
Harris engaged in this conduct while registered as an associated person of his former employer, which was a registered Introducing Broker. In a previous order (Press Release 7803-18), the CFTC ordered Harris’s former employer and its principals to pay restitution to customers for Harris’s unauthorized trading. Because that restitution order has been satisfied, the CFTC did not order Harris to pay restitution.
The order imposes restrictions on Harris’s registration as an associated person, which include certain permanent restrictions such as Harris’s business-related telephone calls must be recorded and his sponsoring firm must conduct quarterly on-site compliance reviews of Harris’s conduct. Harris is also subject to a two-year restriction, during which Harris’s sponsoring firm must implement procedures to verify that Harris received specific authorization from customers for any trades.
Today, CME issued a Notice of Disciplinary Action in which Harris agreed to pay a fine of $1.25 million arising out of the conduct that is the subject of the CFTC’s order. In imposing its civil monetary penalty, the CFTC took into account the fine imposed by the CME in its related action. The CFTC acknowledges and appreciates the assistance of the CME.
The CFTC also acknowledges and appreciates the National Futures Association for its assistance in this matter.
CFTC Division of Enforcement staff members responsible for this case are Nicholas Sloey, Elsie Robinson, Lauren Fulks, Jeff Le Riche, Chris Reed, and Charles Marvine, as well as former staff member Peter Riggs.