Kicked Out of the Club: NFA Orders Commodity Pool Operator Not to Reapply for NFA Membership

By: Matthew J. Rogers and Benjamin C. Skillin

On 10 April 2024, the National Futures Association’s (NFA) Business Conduct Committee (BCC) issued an order against Investments LLC, a former NFA Member commodity pool operator and forex firm. The order stipulates that Investments may not reapply for NFA membership or act as a principal of an NFA Member at any time in the future due to violating a suite of NFA compliance rules.

The order also requires that Hemant Jindal, a former associated person and principal of the company, may not reapply for NFA membership or act as a principal of an NFA Member for a period of 30 months. Jindal is further ordered to pay a $50,000 fine if, after the expiration of the 30-month period, he reapplies for NFA membership or seeks to become a principal of an NFA Member.

The BCC’s Complaint and Decision serve as a prudent reminder for NFA Members to review and update written policies and procedures related to supervision and marketing materials, particularly regarding hypothetical performance.

The BCC alleged that Investments and Jindal used deceptive and misleading promotional material and other communications and presentations that offered a distorted view of the likelihood of customers receiving dramatic profits through investing in the firm. The communications substantially inflated hypothetical performance, without disclosing that such performance was hypothetical or maintaining records to substantiate the claims. The BCC further found that Investments and Jindal continued distributing promotional materials with knowledge that they were misleading and failed to “adhere to high standards of commercial honor and just and equitable principles of trade” by doing so. It was also alleged that Investment and Jindal failed to properly supervise firm operations and employees and lacked proper compliance policies and procedures. 

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