Release Number 8591-22
CFTC Charges New York Introducing Broker with Failing to Maintain Required Audio Recordings
September 23, 2022
Washington, D.C. — The Commodity Futures Trading Commission issued an order today simultaneously filing and settling charges against XP Investments US, LLC (XP), a New York-based Delaware corporation, with failing to maintain certain records required to be kept under the Commodity Exchange Act (CEA) and CFTC regulations.
The order requires XP to pay a $500,000 civil monetary penalty and to cease and desist from any further violation of the CEA and CFTC regulations as charged.
“Proper recordkeeping is vital to protecting our markets and market participants from fraud and manipulation,” said CFTC Acting Division of Enforcement Director Gretchen Lowe. “This case serves as another example of the Commission’s intent to vigorously enforce the recordkeeping obligations of its registrants.”
Specifically, the order finds that XP failed to maintain certain audio recordings for dates in May and June 2019, which as a registered introducing broker, it was required to make and keep for at least one year. This failure occurred after XP relocated its New York office, which was responsible for maintaining the relevant audio recording system. The audio recording system was improperly installed at XP’s new office location by an external vendor, causing the inconsistent and incomplete recording of audio calls on 25 days. Neither spot checks nor XP’s “heartbeat” outage warning system detected the error. Only after XP could not find a specific recording, did it realize that there was an error. Once the error was discovered in June 2019, XP promptly took steps to remediate the problem.
The unrecorded calls included oral communications provided or received concerning quotes, solicitations, bids, offers, instructions, trading, and/or prices that led to the execution of a transaction in a commodity interest and/or related cash or forward transactions.
The CFTC thanks the National Futures Association for its assistance in this matter
The Division of Enforcement staff members responsible for this action are Sean Hennessy, Phillip Tumminio, Maura Viehmeyer, Elizabeth May, Daniel Jordan, Erica Bodin, and Rick Glaser.