Release: #3874-95 For Release: November 3, 1995
CFTC Notifies the NFA of the Results of its Recent Review of the NFA's Financial and Sales Practice Compliance Programs
Washington -- The Commodity Futures Trading Commission's Division of Trading and Markets ("Division") has notified the National Futures Association ("NFA") of the results of its recent review of the NFA's financial and sales practice compliance programs in the area of managed funds.
The Division found that the NFA program is in compliance with applicable regulatory requirements. The report contains eight recommendations designed to enhance the NFA program as it relates to Commodity Pool Operators ("CPOs") and Commodity Trading Advisors ("CTAs"). The recommendations suggest the updating of audit guides; expansion of the audit priority system and the establishment of a minimum audit cycle; follow-up or sanctions for non-response to the annual questionnaires used to update the data base for the audit priority system; verification of compliance pursuant to Commission Rules 4.7 and 4.12; expansion of surveillance of solicitation to include the Internet; the comparison of promotional material to disclosure documents; the comparison of trading profits in proprietary and customer accounts; and the determination of whether all of a CPO's or CTA's accounts are included in disclosures of performance results.
The recommendation regarding surveillance of the Internet follows up on an earlier letter from Chairman Mary Schapiro to NFA's Robert Wilmouth, suggesting that the NFA and the Commission work together to formulate a plan for Internet surveillance. The recommendations suggesting a minimum audit cycle and audit coverage of CPOs and CTAs reflect the Commission's concern about sufficient surveillance of this rapidly expanding segment of the industry.
A copy of the Division's report is available upon request through the Commission's Office of the Public Affairs, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 518-5080.