February 22, 2012
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today filed and settled an action against Aaron Klein of Rochester, N.Y., finding that Klein acted as an undisclosed controlling person and principal of a Commodity Trading Advisor (CTA) registered with the CFTC.
The CFTC order subjects Klein to a cease and desist order and requires him to pay a $50,000 civil monetary penalty. Klein also agreed never to seek registration or exemption from registration with the CFTC or act as a principal, agent, officer, or employee of a CFTC registrant or someone exempted from registration.
Specifically, the order finds that Klein was the CTA’s controlling person because he exercised general control over the CTA and had the ability to control the CTA’s day-to-day functions. The CTA’s primary client consisted of Klein’s family and a friend. According to the order, Klein provided trading instructions to the CTA. He also prepared responses to inquiries from futures commission merchants concerning fee agreements, from third party marketers, and from prospective clients. Klein also directed responses to regulatory inquiries from the National Futures Association (NFA). He drafted responses to the NFA’s audit questions and instructed the only disclosed principal of the CTA to provide the responses to the NFA, the order finds.
The order finds that under CFTC regulations, based on Klein’s activities, the CTA was required to disclose that Klein was a controlling person and principal of the CTA, which it failed to do in its registration application and thereafter in violation of the Commodity Exchange Act (CEA) and CFTC regulations. Because Klein was a controlling person of the CTA and failed to act in good faith or knowingly induced the violations of the CTA, the order holds Klein liable for the CTA’s violations of the CEA and CFTC regulations.
The CFTC thanks the NFA for its assistance.
CFTC Division of Enforcement staff members responsible for this case are Stephen T. Tsai, Anne M. Termine, Rishi K. Gupta, Gretchen L. Lowe, and Vincent A. McGonagle.
Last Updated: February 24, 2012