| CHICAGO, June 20
CHICAGO, June 20 The owners of a U.S. futures
brokerage that regulators have ordered to close for helping to
misappropriate customer funds will open a new brokerage with the
same leadership and staff, company executives said.
The National Futures Association (NFA), which is based in
Chicago and funded by industry fees, on Friday ordered Vision
Financial Markets to shut its brokerage within six months and
pay a $1.5 million fine for "failure to observe high standards
of commercial honor."
Company owners Robert Boshnack and Howard Rothman plan to
register a new brokerage, High Ridge Futures, with the NFA and
have appointed Vision's chief operating officer, Richard
DeMatteo, as its chief executive, according to a letter sent to
customers this month.
High Ridge will be staffed by former employees of Vision,
which will continue to operate as a separate clearing securities
and options broker-dealer.
"The process of 'spinning out' Vision's existing business to
the new company has already begun," general counsel David Stein
said in a statement.
High Ridge, which has not yet applied to register as a
broker, will be subject to a "thorough fitness examination,"
according to the NFA. The regulator said customers who search
for High Ridge in disciplinary records would find information
The NFA banned Vision after Ace Investment Strategists, a
commodity trading advisor that directed most of its business to
the firm, was charged with misappropriating client money over
three years. Vision could have stopped the financial damage,
according to the NFA. The firm paid $2 million in restitution to
Boshnack and Rothman were allowed to form a new brokerage
under a settlement agreement with the NFA, Stein said. He added
that Vision was not accused of profiting from Ace's abuses.
Neither owner was named in the NFA's complaint.
Vision had been the subject of four prior NFA complaints and
was also disciplined by the U.S. Commodity Futures Trading
Vision absorbed the accounts of clients from bankrupt rival
Peregrine Financial Group, which failed in 2012 after its
founder confessed to stealing from clients over two decades. The
NFA failed to detect the fraud despite yearly audits, and its
ban on Vision is the first since Peregrine shut.
Vision had $540 million in customer funds in segregated
accounts as of April 30, putting it in the lower half of brokers
in terms of client assets, according to the CFTC.
(Reporting by Tom Polansek; Editing by Richard Chang)