The United States Commodity Futures Trading Commission (CFTC) has fined US regulated online brokerage GAIN Capital for violations related to the supervising of customer accounts introduced by a referring party to the company.
According to the CFTC notice: “from at least February 1, 2014 to August 31, 2016, Gain failed to diligently supervise accounts by not following its policy regarding trade move requests and having inadequate policies and procedures for reviewing customer accounts. The accounts were introduced by Foremost Trading LLC and traded by the company’s principal, Mark Miller.”
The regulator indicated that the enforcement action is related to a prior CFTC enforcement action for fraud and other violations by the introducing broker. The regulator indicated that the fine and order issued are due to the fact that “Gain missed red flags—Foremost’s suspicious trade move requests and Miller’s trading of both the proprietary and the injured customer’s accounts in the same markets—and did not appropriately surveil these accounts.”
The regulator added that while Gain had a general policy that it would review activity in customer accounts for irregularities or concerns, the policy was inadequate because it did not define what reviews involved and, prior to 2016, did not include follow-on policies or procedures for doing such reviews.
This is an unfortunate turn of developments for the company which was recently acquired by INTL FCStone to form the new brand StoneX.