In the Matter of INTL FCStone Markets, L.L.C.

INTL FCStone Markets, L.L.C. (IFCS) (defendant) was registered with the Commodity Futures Trading Commission (CFTC) (plaintiff) as a swap dealer. From January through July 21, 2013, IFCS employed various limited-purpose traders (LPTs) in its Kansas City energy group, a division of the company dedicated to energy-related derivatives. Among the LPTs employed in the Kansas City energy group was Gregory Evans, who was registered with the CFTC as an associated person. Evans handled energy swap agreements for IFCS customers and also entered into futures trades on IFCS’s behalf to hedge IFCS’s corresponding risk. Some of the customer accounts Evans handled were discretionary, meaning that Evans had power of attorney to make trades without prior approval. Other accounts were nondiscretionary, meaning that prior approval was necessary. Upon investigation, the CFTC found that Evans had engaged in 30 unauthorized trades in a nondiscretionary customer account. The CFTC further found that IFCS provided inadequate oversight of Evans and other LPTs in the Kansas City energy group, lacked adequate policies and procedures to prevent misconduct, and failed to implement then-existing policies and procedures. Although IFCS did have some written procedures, the procedures were inadequate and not diligently enforced. Evans resigned on July 21, 2013. Based on the alleged misconduct and inadequate supervision of LPTs, the CFTC instituted an administrative proceeding against IFCS. IFCS submitted an offer of settlement, which the CFTC accepted.