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NFA’s rule enforcement efforts contribute to market integrity
Safeguarding market integrity requires strict enforcement of NFA rules and regulations. And although the overwhelming majority of NFA Members successfully meet all of their regulatory requirements, NFA has found it necessary throughout its history to take action against rule violators in order to maintain customer confidence in the marketplace. NFA recently released statistics regarding its rule enforcement efforts in 2002.
Last year, NFA issued 27 Complaints against 100 respondents. Decisions were issued against 63 respondents, resulting in over $600,000 in fines, 24 expulsions and 23 suspensions. NFA also issued three Member Responsibility Actions in cases where there was an immediate threat to customer funds and market integrity.
Although most cases are settled prior to a hearing, NFA's Hearing Committee held six hearings and NFA's Appeals Committee heard four appeals in 2002.
"A unique aspect of self-regulation is the fact that NFA Members who violate rules are judged by a panel of their peers," says NFA General Counsel Tom Sexton. "We are very fortunate to have NFA Members and other industry professionals volunteer to serve on our enforcement committees."
NFA strives to conduct its investigations efficiently and expeditiously. The average time required to complete an investigation at NFA in 2002 was less than three months.
"It's very important to us that we complete an investigation as efficiently as possible," says Sexton. "We constantly review our enforcement procedures to ensure that we are using our resources effectively."
The CFTC also periodically reviews NFA's enforcement program. In its most recent report, issued in July 2002, the Commission found NFA's program to be "well designed, executed by well-trained and experienced staff and highly successful in obtaining judgments against rule violations."
Another important element of NFA's successful enforcement program is the ongoing collaboration with other regulators and law enforcement agencies. In October 2002, NFA hosted a meeting of the U.S. Department of Justice's Securities and Commodities Working Group, consisting of representatives of agencies such as the U.S. Attorney's Office, the U.S. Postal Inspector and other regulatory organizations.
"It's critical that NFA remain vigilant in its rule enforcement efforts," says Sexton. "Our efforts benefit investors, the markets, our membership and the entire futures industry."