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CFTC fines Cantor Fitzgerald $700,000

Associated Press Published: November 21, 2012

WASHINGTON (AP) — The U.S. Commodity Futures Trading Commission said Wednesday that Cantor Fitzgerald & Co. Inc. has agreed to pay $700,000 to settle charges related to the financial services firm's handling of its customer accounts.

Cantor and other registered futures commission merchants are required to keep their customers' money from the firm's own funds in a so-called customer segregation account.

As a result, firms are required to calculate on a daily basis the amount of customer funds that need to be separated from the firm's own funds.

The CFTC claims that Cantor failed to maintain sufficient funds in its customer segregation account during a three-day period in January.

The policy violation occurred because Cantor inadvertently transferred $3 million from its customer funds account, instead of from the firm's own funds account, the CFTC said.

The commission also charged Cantor with failing to notify the CFTC that the account holding its customers' funds had gone underfunded, as well as with supervisory failures related to the episode.

Once Cantor discovered the error, it transferred the displaced funds to the customer segregation account, returning the firm back into compliance with the commission's regulations, the CFTC said.

The commission learned of the episode during a routine audit in March.

In addition to paying the $700,000 penalty, Cantor is required to improve how it operates in order to prevent a similar violation from happening again.

The New York-based firm did not immediately return an e-mail seeking comment Wednesday.


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