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Enhanced Supervisory Requirements

NFA Compliance Rule 2-9 places a continuing responsibility on every Member to diligently supervise all aspects of their futures activities, including the sales practices of their employees and agents. Members that have a sales force or principals that have been affected by questionable sales practice training or which charge high commissions and fees are required by the Interpretive Notice to Compliance Rule 2-9 to adopt enhanced supervisory requirements designed to prevent sales practice abuse. 

NFA's Board of Directors believes that the employment history of a Member's APs and principals is relevant in identifying firms with potential sales practice problems. If a Member firm is disciplined by NFA or the CFTC for fraud related to telemarketing or promotional material problems, it is likely that the training and supervision of its sales force was inadequate or inappropriate. Therefore, the Board believes that a Member firm employing such a sales force must have strong procedures designed to ensure that any deficient training its APs and principals received at past employers does not affect their sales practices at the Member.  

Members wishing to view a list of firms disciplined for sales practice or promotional material fraud can visit the Report Center in NFA's Online Registration System. Please visit the Frequently Asked Questions section for additional information.

If you have any questions concerning the enhanced supervisory requirements, please contact James Woo at (312) 781-1643.

  
 
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