ADM Investor Services fined $425K for commingling customer funds

09/30/2013

By Karl Plume

CHICAGO, Sept 30 (Reuters) - The U.S. Commodity Futures Trading Commission fined futures brokerage ADM Investor Services Inc $425,000 for commingling customer funds with funds from its non-customer accounts, the top U.S. derivatives regulator said Monday in a release.

As a futures commission merchant, ADM Investor Services, which is a fully owned subsidiary of U.S. agribusiness giant Archer Daniels Midland, is required to keep customer funds segregated from other accounts per Section 4d(a)(2) of the Commodity Exchange Act.

CFTC found that ADMIS violated the rule when it treated the accounts of certain ADM-owned affiliates as customer accounts prior to July 2011.

"The CFTC Order finds that as a result of ADM's ownership and voting interests in ADMIS and the affiliates, ADMIS was prohibited from commingling its customers' funds with funds held in the affiliates' accounts." the regulator said.

ADMIS said it cooperated fully with the investigation and has updated its procedures to ensure compliance with CFTC rules.

"No ADMIS customer suffered any financial loss as a result of the account classification that was the subject of the settlement," said Thomas Kadlec, president of ADM Investor Services.

"The Commission has not alleged or found that ADMIS profited from the classification of these accounts as customer accounts, nor have they alleged or found that we intended to profit from it," he said.

Lax protection of customer funds contributed to the collapse of futures brokerage MF Global in October 2011, which left clients short of $1.6 billion, investigators determined.



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