Articles in August 2013

CFTC Sues Peregrine Financial Group External CPA: Says Her Audits Were Not Up To Professional Standards and She Missed Signs of Problems

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News Developments | Print

The US Commodity Futures Trading Commission today filed and settled an enforcement action against Jeannie Veraja-Snelling, the external certified public accountant responsible for auditing Peregrine Financial Group’s year-end financial statements from 2001 through 2011. In general, says the CFTC, Ms. Veraja-Snelling did not conduct her audits of Peregrine in accordance with Generally Accepted Auditing Standards and, in conducting her audits of Peregrine, missed various red flags indicating potential problems.

This matter follows by a week a report by the Public Company Accounting Oversight Board that found of 43 audit firms and portions of 60 audits of SEC registered broker dealers reviewed, deficiencies were present in all the audit firms and 57 out of the 60 audits. Moreover, it also follows the November 2012 publication of proposed enhancements to its customer protection rules by the CFTC that, among things, proposes changes to rules impacting auditors and audits, as well as a January 2013 report of NFA by Berkeley Research Group related to NFA’s own audits of Peregrine.

Gary DeWaal’s Bridging the Week: August 19-23 and 26, 2013

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Bridging the Week | Print

This week on Gary DeWaal’s Bridging the Week, algorithmic trading gets most of the headlines because of a proposed rule change by FINRA in the United States, guidance issued by ASIC in Australia, and an all broker dealer review in China. Also reviewed this Week on Bridging the Week are:

1. A CFTC Interpretation on Retail Commodity Transactions;
2. FATCA Reporting Begins;
3. PCAOB Issues a Very Disturbing Report on Audits of US Broker Dealer Capital and Reserve Calculation Computations, among other things,

and more

Bridging the Week: August 12-16 and 19, 2013

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Bridging the Week | Print

In case you missed it Monday, this week, Bridging the Week reviews “Lessons Learned” from enforcement actions brought against two former JP Morgan traders as well as: (1) the CFTC, FINRA and the SEC provide guidance for business continuity plans after surveying financial intermediaries’ response to Superstorm Sandy; (2) IOSCO and CPSS seek advice on recovery plans for financial market intermediaries such as clearing houses and trade repositories; (3) the CFTC issues final risk management standards for systemically important designated clearing organizations; (4) ASIC announces new high frequency trading guidance effective February 2014, and more.

CFTC OK’s Compliance with Equivalent SEC Rules for Investment Companies Whose Advisors Must Register as CPOs; Some Changes Benefit All CPOs and CTAs

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Helpful to Getting the Business Done, Managed Money, News Developments | Print

The Commodity Futures Trading Commission yesterday adopted final regulations regarding certain compliance obligations applicable to certain funds whose advisors are now required to register as commodity pool operators, as a result of 2012 amendments to CFTC rules. In general, the CFTC will permit such entities — under the doctrine of substituted compliance — to comply with applicable Securities Exchange Commission requirements in order to satisfy their obligation to comply with comparable CFTC requirements.

In doing so, however, the CFTC also amended certain provisions of CFTC Rules applicable to all CPOs and commodity trading advisors. As a result, all CTAs and CPOs should review these new requirements, let alone registered investment companies whose advisors are required to register as CPOs.

Bridging the Week: August 5 - 9 and August 12, 2013

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Bridging the Week | Print

What are the top systemic risks to the financial services industry? Has another senior compliance officer been sanctioned again? And, when are fancy compliance systems not enough?

This week, Gary DeWaal’s Bridging the Week examines interesting and important international developments impacting the financial services industry, including:

1. DTCC (USA) publishes an important “think piece” on systemic risks increasingly impacting industry participants;
2. the UK FCA penalizes a senior compliance officer for not performing his job adequately;
3. ASIC (Australia) penalizes a brokerage firm for not adequately dealing with wash trading by a client — despite having a well-regarded compliance monitoring system that flagged the relevant trades;
4. ESMA (Europe) updates its EMIR Q&As;
5. FINRA (USA) fines a brokerage firm for AML violations and for missing red flags;
and more.

Also at least one international regulator is concerned about the lack of gender diversity in senior positions at public corporations!

Alphabet Soup under CFTC Scrutiny: CFTC Review of CME handling of EFRPs (EFPs, EFRs, and EOOs) Suggests Tougher Times for Traders and FCMs; Time to be Pro-active!

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Compliance Weeds | Print

On August 2, 2013, the Commodity Futures Trading Commission released a Rule Enforcement Review of the Chicago Mercantile Exchange for the period November 1, 2010 through October 31, 2011. In general the CFTC reviewed the Exchange’s compliance with core principles related to market surveillance and generally found that the CME’s routine market surveillance was adequate.

However the CFTC raised a number of concerns regarding the CME’s monitoring of so-called EFRP transactions (Exchange of Futures for Related Positions) that should prompt traders and futures commission merchants to examine how they conduct and oversee ERFP transactions – not just in connection with CME products, but products of other contract markets too.

What does this mean practically for traders and Future Commission Merchants?

Bridging the Week: July 29 - August 2, and August 5, 2013

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Bridging the Week | Print

This week on Gary DeWaal’s “Bridging the Week: July 29 - August 2 and August 5, 2013,” Gary DeWaal and Associates’ update on the most relevant industry developments worldwide from the prior week, Gary discusses:

1. The US CFTC’s criticism of the CME over its monitoring of so-called off-exchange EFRP transactions and what this may mean for industry participants;
2. The SEC’s new capital and customer funds’ protection rules;
3. FERC’s suit against and settlement with JP Morgan over its alleged manipulation of California and Midwest electricity markets;

and more.