Failure to Respond Promptly to the NFA Could Result in Permanent Membership Ban
Florida CTA City Capital Management LLC Permanently Barred from NFA for Violating Compliance Rules
On May 7, the National Futures Association (NFA) announced the permanent membership bar of Naples, Florida-based commodity trading advisor (CTA) City Capital Management LLC (CCM) and its sole principal and associated person Jonathan Lee (Lee).
The NFA charged CCM with violating Compliance Rule 2-41, which addresses the failure to provide approved disclosure documents to customers. During the NFA’s examination of the firm, the NFA found that CCM was providing its customers with disclosure documents that had not yet been approved by the NFA.
In addition, the NFA found CCM’s disclosure documents to be misleading because they omitted information about CCM’s trading programs and past performance information.
CCM and Lee were also charged with violating Compliance Rule 2-5, which requires NFA Member Firms to promptly and fully cooperate with the NFA. In 2009, the NFA made several unsuccessful attempts to contact Lee regarding an NFA audit report. Lee did not respond on time, thus violating Rule 2-5.
The takeaway? Always respond promptly to the NFA. In the Alpari case (link is below), Alpari was fined by UK’s Financial Services Authority (FSA) and received a 30% discount on the fine for being so cooperative!
To read the NFA Complaint, click here.
To read the NFA Decision, click here.
The full text of the NFA Press Release is reprinted below and can also be found by clicking here.
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May 07, 2010
For more information contact:
Larry Dyekman (312) 781-1372, ldyekman@nfa.futures.org
Karen Wuertz (312) 781-1335, kwuertz@nfa.futures.org
NFA permanently bars Florida firm, City Capital Management LLC and its principal
May 7, Chicago - National Futures Association (NFA) has permanently barred City Capital Management LLC (CCM) and its principal, Jonathan Lee from NFA membership. CCM is a Commodity Trading Advisor located in Naples, Florida. The Decision, issued by NFA’s Business Conduct Committee, is based on an NFA Complaint filed in February 2010.
The Committee found that CCM failed to provide an NFA approved disclosure document to customers. Additionally, the Committee found that CCM and Lee failed to cooperate promptly and fully with NFA during NFA’s audit of CCM by failing to respond to certain requests set forth in NFA’s audit report. CCM and Lee failed to file an Answer to the Complaint. CCM and Lee may appeal the Decision to the Appeals Committee of NFA.
The complete text of the Complaint and Decision can be found on NFA’s website (www.nfa.futures.org).
NFA is the premier independent provider of innovative and efficient regulatory programs that safeguard the integrity of the futures markets.
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Bart Mallon, Esq. of Mallon P.C. runs the Forex Law Blog and provides forex registration service through forexregistration.com. Mr. Mallon also runs the Hedge Fund Law Blog. He can be reached directly at 415-868-5345.
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