November 28, 2011
CFTC Orders London-based Enskilda Futures Ltd. and Its Swedish Principal, Skandinaviska Enskilda Banken AB, to Pay a $150,000 Civil Penalty for Supervision Violations
Washington, DC - The Commodity Futures Trading Commission (CFTC) today issued an order filing and simultaneously settling charges against Enskilda Futures Ltd. (EFL), a London-based futures commission merchant (FCM), and Skandinaviska Enskilda Banken AB (SEB) for failing to diligently supervise accounts carried by EFL in violation of CFTC regulation 166.3. SEB is a financial services group incorporated in Sweden that, according to the order, controls and directs EFL’s FCM activities. EFL’s immediate parent company is a fully-owned subsidiary of SEB. The CFTC order requires EFL and SEB jointly and severally to pay a $150,000 civil monetary penalty.
The CFTC order finds that from at least February 5, 2010 through June 9, 2010, EFL maintained an inadequate system of supervision and internal controls to detect and deter potential violations of the Commodity Exchange Act and CFTC regulations, such as wash or fictitious sales. Consequently, the order finds that EFL violated Commission regulation 166.3 because it failed to diligently supervise the handling by its partners, officers, employees, and agents of all commodity interest accounts carried, operated, advised or introduced by EFL, and all other activities of such persons relating to its business as a CFTC registrant.
The CFTC order finds SEB liable for EFL’s violations because EFL was an agent of SEB and SEB acted as EFL’s principal. In particular, the order finds that the six individuals who serve on EFL’s board of directors are all SEB employees. The order further finds that EFL does not have any employees or offices, but relies totally on SEB and SEB employees to provide services and facilities to meet all of its operational needs. These services include management, compliance, audit services, legal and risk management services, and IT network and operations.
Moreover, according to the order, EFL is not involved in the direct solicitation or acceptance of client orders. However, EFL utilizes SEB’s compliance policies and conforms to SEB’s operational procedures. All client contact is maintained by SEB, whose employees solicit transactions from SEB’s clients generally, including those transactions which EFL enters on the U.S. futures exchanges, the order finds.
The CFTC thanks the CME Group for its cooperation.
The CFTC Division of Enforcement staff responsible for this case are Elizabeth N. Pendleton, William P. Janulis, Rosemary Hollinger, Melissa Glasbrenner, and Richard B. Wagner.
Last Updated: November 28, 2011