Interpretive Notices

9010 - INFORMATION AVAILABLE FROM NFA REGARDING BACKGROUND OF PROSPECTIVE EMPLOYEES

INTERPRETIVE NOTICE

The purpose of this Notice is to remind Members of their obligations with respect to prospective employees and the information available from NFA to help Members achieve compliance with these obligations.

I. Obligations of FCMs, FDMs, IBs, CPOs and CTAs

NFA Compliance Rule 2-9 requires each FCM, IB, CPO and CTA Member to supervise diligently the commodity interest activities of their employees and agents. Likewise, NFA Compliance Rule 2-36 imposes an obligation for each FDM to diligently supervise the forex activities of its employees and agents. Obviously, all FCM, IB, CPO and CTA Members and all FDMs should carefully screen prospective APs, both to ensure their qualifications and to determine the extent of supervision the prospective AP would require if hired.

All applicants for AP registration are required to fill out the Form 8-R, supplying, among other things, information concerning their recent employment history and any disciplinary proceedings against them. What may not be immediately apparent from the face of the application is whether any of the applicant's previous employers have been the subject to disciplinary proceedings by the Commission or by NFA. This information could be helpful to a prospective employer in determining the extent of supervision a particular applicant would require after he is hired. Certainly, if a recently hired AP has received the bulk of his professional training and experience from, for example, a number of firms which have been closed down as a result of disciplinary proceedings brought by the Commission or by NFA, that individual may well require closer supervision for a period of time than other APs.

II. Obligations of SDs and MSPs

Pursuant to CFTC Regulation 23.22 and NFA Compliance Rule 2-49, SDs and MSPs are prohibited from permitting an individual who is subject to a statutory disqualification to effect or be involved in effecting swaps on behalf of the SD or MSP if the SD or MSP knows or in the exercise of reasonable care should know of such statutory disqualification. All SD and MSP Members should carefully screen individuals who will effect or be involved in effecting swaps for statutory disqualifications, including by reviewing any applicable information available from NFA.

III. Information Available from NFA

If you have any questions regarding whether the Commission or NFA has taken any action against a particular firm or individual, check the BASIC system on NFA's web site at www.nfa.futures.org, send a request to NFA through the "contact" feature of the web site, or call NFA's Information Center at (800) 621-3570. Summary information concerning the proceeding is available through BASIC or can be provided over the phone, and copies of any available documents relating to the proceeding can be provided upon request.

Prospective employers are also entitled to any non-public registration records regarding a prospective employee. For example, each applicant for registration as an AP must complete the disciplinary history portion of the Form 8-R, and must supply a detailed explanation of any "yes" answers to those questions. That detailed explanation is treated as non-public but is available to prospective employers under NFA Registration Rule 701(c). Thus, a prospective employer may obtain the non-public supplementary information which the applicant may have submitted in connection with any past registrations.

The supervision of employees must be an issue of paramount concern to all NFA Members. NFA recognizes that certain employees, by virtue of their past training or experience, may need more supervision than others and will gladly supply our Members with whatever information may be available to help identify those employees.