CFTC Orders Vision Financial Markets LLC to Pay a $525,000 Penalty for Violations of Customer Fund Segregation Requirements, Failure to Notify the CFTC of its Under-Segregation, and Misstatements to the CFTC
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Vision Financial Markets LLC (Vision), for failing to segregate commodity and options customer funds, failing to notify the CFTC and Vision’s designated self-regulatory organization (DSRO) of its under-segregation, and making misstatements to the CFTC about the location and manner in which the customer funds were being held. Vision is registered with the CFTC as a Futures Commission Merchant and with the Securities and Exchange Commission as a broker-dealer.
The CFTC Order requires Vision to pay a $525,000 civil monetary penalty and cease and desist from violating the Commodity Exchange Act and Regulations, as charged.
In the Order, the CFTC finds that Vision, after using commodity futures and options customer funds to purchase securities, failed to account for and hold those securities separately for its customers. Instead, between approximately August 2008 and June 2009, Vision commingled the securities with its own funds and the funds of its securities customers in Vision’s participant account held in its own name at the Depository Trust Company (DTC). Vision represented to the CFTC that the securities were “deposited in segregated funds bank accounts,” when, in fact, certain Vision personnel involved with preparing and submitting the monthly segregation statements knew that the assets were not held at a bank but actually were held in Vision’s account at DTC and were commingled with funds of Vision and others, according to the Order.
The Order further finds that after Vision’s segregation violations and misstatements were uncovered in June 2009, Vision restated its monthly segregation statements, deducting the value of the customer funds held in the DTC account from its calculation of total segregated funds. From December 2008 through May 2009, when Vision had invested larger amounts of customer funds in securities, excluding their value from Vision’s calculation of total funds in segregation put Vision in a position of under-segregation for a six month period. However, during that period, Vision did not notify the CFTC or its DSRO that it was under-segregated, the Order finds.
The CFTC Division staff members responsible for this case are Candice Aloisi, Laura Martin, Lenel Hickson, Jr., Stephen Jay Obie, Manal Sultan, and Vincent McGonagle. Kevin Piccoli and William Tylinski of the CFTC’s Division of Swap Dealer and Intermediary Oversight also assisted in this matter.