| NEW YORK
NEW YORK Dec 3 A U.S. federal court has ordered
a futures brokerage run by well-known New York trader Mark
Fisher to pay $650,000 for not properly segregating customer
funds following a complaint filed by the country's top commodity
The U.S. Commodity Futures Trading Commission accused
Fisher's MBF Clearing Corp in March of holding between $30
million and $90 million of customer funds between September 2008
and March 2010 in an account at a separate financial institution
that did not meet the requirements of the Commodity Exchange
The account did not have the "legal obligation to make
customer funds available for redemption by the next business
day". Nor was the account properly labeled as a "customer
segregated account," the CFTC complaint said.
The agency went to federal court for an order requiring MBF
Clearing to pay the fine. Once it is paid, the firm will be
clear of CFTC charges.
Fisher did not immediately return a message left with his
New York office seeking comment.
Futures commission merchants, which hold money and place
trades for other firms engaged in energy, metals and agriculture
trading, have been under a cloud due to the recent collapse of
two major players in the industry.
Both the firms, MF Global and Peregrine
Financial Group, were found to have had shortfalls in customer
funds that were supposed to be kept separate from their own
money, a standard held sacred by commodity market participants.
MF Global, run by Jon Corzine, a former United States
senator from New Jersey, declared bankruptcy in October 2011
after making wrong-way bets on European sovereign debt and
facing a shortfall of some $1.6 billion in customer money.
In July, Iowa-based Peregrine Financial Group filed for
bankruptcy and two months later its chief executive, Russell
Wasendorf Sr., pleaded guilty to stealing more than $100 million
in customer money.
The industry is attempting to police itself more
efficiently. In April, the CME Group set up a $100
million fund to reimburse farmers and ranchers losses due to
insolvency "of a clearing member or other market participant,"
it said in a release.
And in October of this year the CFTC laid out a proposal to
add another layer of protection to customer money, which would
allow organizations such as the National Futures Association
access to brokerages' bank accounts.