October 4, 2010
CFTC Sanctions Triland USA Inc. $725,000 for Failing to Maintain Secured Customer Funds and Failing to Provide Timely Notice to the CFTC of the Deficiency
Washington DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against Triland USA Inc. (Triland), a registered futures commission merchant (FCM), chiefly related to the firm’s failure to follow CFTC regulations governing secured funds of foreign futures and option customers. Triland is based in New York, N.Y.
The CFTC order requires Triland to pay a $725,000 civil monetary penalty and to cease and desist from future violations of CFTC regulations.
The CFTC order, entered on September 30, 2010, finds that Triland also failed to obtain acknowledgement from a depository institution that the secured funds were being held for customers in accordance with CFTC regulations and failed to provide timely notice to the CFTC that Triland had a deficiency in the amount of its secured funds. Additionally, the order concludes that Triland failed to supervise diligently the handling by its employees of matters relating to its secured accounts.
Specifically, the CFTC order finds that, in late December 2008, Triland opened a bank account for a customer to trade products that settled in euros. This customer was located in the United States and intended to trade foreign futures or options.
Under CFTC regulations, an FCM must keep the funds of such customers in a separate, specially designated secure account. Instead, Triland opened the account as a non-secured “house” account, and the customer transferred funds into the non-secured account on January 20, 2009, the order finds. On February 5, 2009, a second U.S. customer trading foreign futures and options transferred funds into the “house” account. Triland opened a secured account on February 6, 2009, but did not transfer these customers’ funds into that secured account until March 24, 2009. As a result, Triland had a deficit in its secured funds and was required to immediately notify the CFTC of the deficit. Triland did not notify the CFTC until July 2, 2009.
CFTC regulations also require an FCM to obtain an acknowledgement from the bank holding its customers’ funds that those funds are being held in a secured account. According to the order, Triland failed to obtain a satisfactory acknowledgement letter until April 2009. The CFTC order finds that when these events occurred, Triland did not have procedures in place to ensure that its employees properly handled its secured accounts.
Triland has undertaken significant remedial measures to prevent further violations of the regulations, according to the order.
The CFTC Division of Enforcement staff responsible for this case are David Terrell, Elizabeth M. Streit, Scott R. Williamson, Rosemary Hollinger and Richard Wagner. The Division thanks Gerald Nudge and Lisa Hazel of the CFTC Division of Clearing and Intermediary Oversight for their assistance.
Last Updated: October 4, 2010