REFILE-UPDATE 1-U.S. fines ABN AMRO unit $1 million for violations

Wed Jun 19, 2013 11:35am EDT

By Douwe Miedema

WASHINGTON, June 19 (Reuters) - The top U.S. derivatives regulator fined ABN AMRO Clearing Chicago LLC $1 million for a raft of breaches in the handling of customer accounts over a period of three years.

The Dutch bank's futures trading unit had failed to properly segregate client funds by placing them in separate accounts on four occasions, the Commodity Futures Trading Commission (CFTC) said on Wednesday.

The unit also failed to meet minimum capital requirements, maintain accurate books and records, or supervise its employees, said the CFTC, which oversees both futures and swaps markets.

"Each of these violations was a result of ABN AMRO's insufficient controls, reflecting a lack of supervision over ... accounts," the CFTC said in its order.

The breaches of the rules occurred over a three-year period between March 2009 through at least January 2012.

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, congressional investigators determined last year.

The bankruptcy of MF Global, led by former Goldman Sachs banker Jon Corzine, was followed rapidly by the downfall of Peregrine Financial Group, or PGBest, and two scandals prompted the CFTC to tighten the rules.

ABN AMRO, which is state-owned after a government bailout during the financial crisis, is settling the charges without admitting or denying wrongdoing, the CFTC said.

"Under the terms of the settlement, (the unit) will hire a consultant to review and evaluate the firm's internal controls and make recommendations," ABN AMRO said.

In May, ABN AMRO Clearing appointed John Ruth as chief executive of its Chicago office.

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