The National Futures Association ("NFA") permanently barred a former "associated person" of a commodity trading advisor from membership or from acting as a principal for any NFA member.
The Decision (see also the NFA Complaint) was issued in accordance with a settlement offer from Christian Robert Mayer, who was charged with making unauthorized trades in the accounts of customers, transferring profitable trades to his personal account, and leaving losing trades in the customer accounts. The employer, Northstar Commodity Investment Co. LLC, agreed to pay a $15,000 fine for supervisory violations related to Mr. Mayer's conduct (see previous coverage).
Mr. Mayer was charged with violations of NFA Compliance Rules 2-2(a) and 2-2(h).
Commentary / Bob Zwirb
Although the permanent ban appears to be appropriate here in light of the gravity of the misconduct, which involved customer fraud, it should be noted that there appears to be some resistance from the judiciary from imposing the "death penalty" in every circumstance where it is sought. For example, a federal judge recently rejected an effort by the CFTC to permanently bar an energy trader from trading, notwithstanding his plea of guilty to making multiple false entries in his employer's records to conceal trading losses related to unauthorized purchases of crude oil futures contracts. The judge also lowered the amount of civil penalty sought by the CFTC, finding the sanctions "excessive and unrealistic" for a respondent who, in the judge's opinion, will never violate the CEA again. CFTC v. Fan Wang, No. 1:16-cv-06961 (S.D.N.Y. 2017). It certainly wouldn't hurt in such circumstances if the NFA and the CFTC made more of an effort to justify the level of sanctions they are seeking in legal and economic terms in their Orders, which generally are bereft of any analysis of this important issue. For as the Ninth Circuit once observed, in "exercising the important and delicate governmental function of punishing illegal conduct," a federal agency must avoid exercising such power in a manner "that is an assertion of arbitrary power rather than an act of reason grounded on the record before the agency." Miller v. CFTC, 197 F.3d 1227 (9th Cir. 1999).
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