NinjaTrader Clearing, LLC (NTC) has been fined $983,425 by the Commodity Futures Trading Commission (CFTC) for failing to properly oversee the management of fraudulent accounts. As part of the penalty, the company must pay a $750,000 civil fine and $233,425 in restitution to victims of the fraud.
Lapses in Account Supervision
The CFTC claims that NinjaTrader, a futures commission merchant based in Illinois, neglected to sufficiently monitor employee actions related to accounts flagged as fraudulent. A court order had required the company to freeze or restrict these accounts immediately, but NinjaTrader reportedly delayed action.
This delay resulted in open positions within the fraudulent accounts losing more than $200,000 in value, exacerbating the financial harm caused by the schemes. According to the CFTC, the firm lacked adequate procedures and policies to handle such high-risk situations efficiently.
Failure to Respond to Court Orders
Starting in late 2020, NinjaTrader allegedly did not establish the necessary protocols to address court orders concerning accounts involved in fraudulent activities. Even after receiving a statutory restraining order in January 2022, the company allowed the suspicious accounts to continue operating.
Settlement and Penalties
To settle the charges, NinjaTrader will pay a civil fine of $750,000 and $233,425 in restitution to compensate the victims. This penalty comes shortly after the CFTC imposed a $22 million fine on Nasdaq Futures for regulatory violations involving undisclosed payments under its market maker incentive programs.
The CFTC stated that Nasdaq Futures, which operated a designated contract market (DCM) for energy futures from 2015 to 2018, did not fully disclose the terms of its payments to market makers, violating relevant regulations. Moreover, Nasdaq Futures was accused of providing false information to the regulator when questioned about these practices.
