E*TRADE Securities and E*TRADE Clearing are to jointly pay a USD280,000 civil monetary penalty to settle CFTC charges over non-compliance with applicable record-keeping rules and failure implement diligent supervision.
Both entities have their headquarters in Chicago, Illinois.
The CFTC order finds that between October 2009 and January 25, 2014, E*TRADE Securities did not preserve and maintain certain audit trail logs for their customers. Similarly, E*TRADE Clearing did not preserve and maintain customer audit trail logs after becoming registered as a Futures Commission Merchant in February 2013.
The order finds that by not preserving and maintaining these records, E*TRADE Securities and E*TRADE Clearing violated Section 4g(a) of the Commodity Exchange Act (CEA) and CFTC Regulations 1.31 and 1.35.
In addition, the order finds that E*TRADE Securities and E*TRADE Clearing violated CFTC Regulation 166.3 by failing to implement policies and procedures to ensure the retention of these records and failing to respond to a previous warning from its vendor that it did not preserve these records
To prevent similar problems in the future, the CFTC order also requires E*TRADE Securities and E*TRADE Clearing to improve their record-keeping procedures by updating their policies and procedures and providing appropriate training to officers and employees regarding the CEA’s record-keeping requirements.
