For Release: April 21, 2008
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today the issuance of an order filing and simultaneously settling charges against Alaron Trading Corporation (Alaron), of Chicago, IL, a registered futures commission merchant. The order requires Alaron to pay a civil monetary penalty of $180,000 and restitution of $119,295.14 to customers. Alaron must also strengthen its supervisory system for overseeing its associated persons’ (APs), employees’ and agents’ sales solicitations and maintenance of customer accounts traded by third parties.
Specifically, the CFTC order, entered on April 18, 2008, finds that from at least July 2004 until February of 2006, Alaron failed to supervise diligently its employees in their handling of certain accounts managed by an unregistered commodity trading advisor (CTA), as well as certain other accounts in which they allowed unauthorized trading of customer accounts by an introducing broker (IB).
During the relevant time period, due to deficiencies in Alaron’s supervisory system, Alaron did not detect the unregistered activity and unauthorized trading. According to Alaron’s trading records, it carried accounts for at least 25 clients in which an unregistered CTA managed an aggregate of $213,850.70. Despite numerous indications to Alaron employees that it was permitting an unregistered CTA to manage accounts, Alaron did not have adequate compliance procedures to discover, deter and/or terminate the wrongful conduct.
In addition to the trading by an unregistered CTA, Alaron allowed an IB to trade customer accounts without authorization. Beginning in August 2005 and continuing through February 2006, Stephen Randall Moore (Moore) and his company Moore Group, Inc. solicited customers via cold calls and existing client referrals to invest in exchange-traded futures contracts. Throughout the relevant period, Moore Group, Inc. was registered as an IB, and Moore was registered as an AP of Moore Group, Inc.
The majority of Moore’s customers opened non-discretionary accounts, where Moore could only send buy and sell orders to Alaron as directed by the respective customer. The account opening documents at Alaron for these accounts did not contain letters of direction or powers of attorney, and, therefore, Alaron knew or should have known that Moore’s customers held non-discretionary accounts.
The following CFTC Division of Enforcement staff are responsible for this case: Timothy J. Mulreany, David Reed, Michael Amakor, Paul Hayeck and Joan Manley.
Last Updated: April 21, 2008