The US Commodity Futures Trading Commission (CFTC) today issued orders filing and settling charges against Marex North America LLC, a registered futures commission merchant with its principal place of business in New York, New York, and Marex Spectron International Limited, a registered introducing broker with its principal place of business in London, United Kingdom, for failure to meet minimum adjusted net capital requirements.
The regulator’s charges were part of a number of enforcement actions reported by the CFTC regarding capital deficiencies at several US and foreign based firms. The specific order requires Marex and Marex Spectron to pay civil monetary penalties of $250,000 and $120,000, respectively, and require both entities to cease and desist from any further violations of the Commodity Exchange Act and CFTC regulations, as charged.
The CFTC indicated in its order that “in computing their adjusted net capital, Marex and Marex Spectron each improperly accounted for deductions arising out of an agreement they entered to guarantee a revolving line of credit for an affiliated company. During the period in which Marex and Marex Spectron were guarantors, funds were periodically drawn on the line of credit for the benefit of the affiliated company, in amounts ranging from $10 million to $95 million. However, neither Marex nor Marex Spectron deducted the amount of the guaranteed drawdowns in their calculation of adjusted net capital as required.”
US regulators have been very vigilant as of late towards firms maintaining net capital requirements as instructed based on their regulatory and registration status with US regulatory bodies, such as the NFA, CFTC and SEC. All firms operating within such US regulations should heed advice to stay on top of all financial reporting requirements in order to avoid hefty penalties.
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