NFA has taken this Member Responsibility Action (MRA) to protect IAG’s customers and also to protect investors in the commodity pools and other investment vehicles controlled by Kelly and Murphy. The action is deemed necessary because IAG, Kelly and Murphy appear to have misappropriated customer funds, failed to cooperate fully with NFA in its investigation of their activities and failed to demonstrate that they are in full compliance with NFA Requirements.

Effective immediately, IAG, Kelly, and Murphy are prohibited from disbursing or transferring customer, investor, and commodity pool funds without prior NFA approval. Additionally, IAG, Kelly and Murphy are prohibited from soliciting or accepting any funds from customers or investors, soliciting investments for any commodity pools or other investment vehicles or placing any trades on behalf of customers, commodity pools or investors. Murphy is also prohibited from introducing any customer accounts. The MRA will remain in effect until IAG, Kelly and Murphy have demonstrated that they are in complete compliance with all NFA Requirements. IAG, Kelly and Murphy may request a prompt hearing before NFA’s Hearing Committee.

The signing took place between Mr Paul Koster, Chief Executive of the DFSA, and M Jean-Pierre Jouyet, Chairman of the AMF.

The AMF is France’s independent public body responsible for safeguarding investments in financial instruments and in all other savings and investment vehicles; for ensuring that investors receive material information; and for maintaining orderly financial markets. The AMF also lends its support to financial market regulation at European and International levels.

The Chief Executive of the DFSA, Mr Paul Koster said: “The Autorité des marchés financiers has been a valued member of the International Organisation of Securities Commissions (IOSCO) and an active participant in the work of the Committee of European Securities Regulators (CESR), adopting and harmonising international standards in Europe and continuing to establish world-class standards in the regulation of capital markets. As such, this MoU is a significant initiative, recognising the importance of these arrangements for co-operation and information sharing between the two regulators.”

Both the AMF and the DFSA are signatories to the IOSCO multi-lateral MoU, having satisfied the highest standards of co-operation and assistance among IOSCO members.  It is enhanced by today’s bi-lateral agreement which reflects each agency’s responsibilities in the regulation of securities.

This initiative reflects France’s continuing commitment to the UAE, as the AMF already enjoys a significant and warm relationship with our federal counterpart, the Emirates’ Securities and Commodities Authority (SCA), having signed a bi-lateral MoU in April 2009. Reflecting its status as an integrated regulator, the DFSA also has an MoU with Commission Bancaire, France’s banking supervisor, signed in August 2008.

“As a result of this signing, the DFSA now has a bi-lateral and multi-lateral MoU network with 90 regulators across the globe, which underlines the importance of effective co-ordination and co-operation”, Mr Koster said.

The Honorable Joan H. Lefkow of the United States District Court for the Northern District of Illinois entered the consent order of permanent injunction on February 25, 2010. The order resolves a complaint brought by the CFTC on December 13, 2007 (CFTC v. One World Capital Group, LLC, and John Edward Walsh, Civil Action No. 07 CV 7002 (N.D. Ill. filed Dec. 13, 20070, and CFTC Press Release 5424-07, December 18, 2007). The complaint charged One World, a registered futures commission merchant and forex dealer member, and its president Walsh, with inability to demonstrate compliance with capitalization requirements and with failure to maintain required books and records as required by federal commodity laws.

According to the order, Walsh admitted that he could not make the required net capital calculation because he was unable to determine One World’s current liabilities to forex customers or One World’s ability to pay its customer liabilities. The known financial accounts held in the name of One World on December 13, 2007, contained a total of only $639,815, which was at least $9 million short of the claimed liabilities to customers who maintained accounts with One World for the purpose of trading foreign currency contracts. The order also states that One World and Walsh failed to maintain books and records as required by CFTC regulations.

In a separate action on March 4, 2010, based on the facts of the federal district court case, the CFTC simultaneously filed and settled a statutory disqualification action against One World Capital Group, revoking its registrations as a futures commission merchant and commodity trading advisor.

In January 2009, Walsh was arrested on federal fraud charges in connection with the operation of One World Capital Group. In February, 2009, criminal authorities seized assets of Walsh and One World, including the funds frozen by the court in the CFTC action.

Smith fraudulently operated a forex trading scam, luring customers to trade managed forex accounts or pooled forex investments by claiming forex trading success and offering promises of quick and large returns, such as 30 percent in 30 days. Smith allegedly claimed that 95 percent of his trades are winning trades. Smith also used a website and a video posting on www.youtube.com to solicit customers, according to the complaint. In reality, however, Smith used little, if any, of the funds to trade forex. Instead, he used customer funds for personal expenses, such as for pool services, carpeting and furniture, according to the complaint. Customer funds also were allegedly used for purported profit payouts and for business expenses.

Relief defendants Tigre and Duty Smith opened and maintained the bank account into which defendant Smith directed customers to deposit their funds. As further alleged, no funds from this bank account appeared to be directed to any trading; instead the account was used as a personal checking account of the Smiths.

Defendant Smith allegedly used a video posting on www.youtube.com to lure and solicit customers

A designated Subcommittee of NFA’s Membership Committee issued the Final Orders revoking registration because the APs had misrepresented that English was not their primary language in order to receive additional time to complete the Series 3 examination, a proficiency exam all individuals registering to become an AP must pass.

The Subcommittee declined to revoke the registrations of Teresia A. Bactawar and Lusay A. Wooten. The Subcommittee found that Wooten and Bactawar truthfully represented that English was not their primary language.

The Final Orders reinforce NFA’s continuing efforts to prevent proficiency exam abuses. Pioneer, a former introducing broker Member of NFA, was permanently barred from NFA membership in August 2009 for its misrepresentations and failure to supervise its Series 3 training. See previous press release.

The Final Orders become effective April 1, 2010. Grena, Nilman, Payne, Rill and Silverman may file a Notice of Appeal with the Commodity CFTC.

This Consultation Paper details proposed changes to the Markets Law 2004 and the Offered Securities Rules.

The CFTC recently published its proposed forex rules, including the registration requirements. Although the final rules and the date they will become effective have not yet been published, National Futures Association (NFA) has prepared this brief summary of the current proposed forex registration requirements to give firm and individual applicants a basic understanding of the registration process.

Firm Registrations

All forex firms registering as a Guaranteed Introducing Broker, Commodity Trading Advisor or Commodity Pool Operator must meet the following requirements:

Completed Online Registration Forms:
Applicants must file a completed 7-R form through NFA’s Online Registration System (ORS).  NFA has published an ORS Users Guide and a tutorial on its website that provide step-by-step instruction for the most common registration tasks.

Additional Requirements for Introducing Brokers:
Applicants registering as Guaranteed Introducing Brokers must submit a completed Guarantee Agreement (Form 1-FR-IB Part C) from a Forex Dealer Member (FDM).

Additional Requirements for Commodity Trading Advisors and Commodity Pool Operators:
Before they can begin soliciting customers, CTAs and CPOs must submit a Disclosure Document to NFA for approval. The Disclosure Document must be completed in accordance with NFA Compliance Rule 2-41.

Individual Registrations

Any individual applying as an Associated Person (AP) or Principal of a Forex IB, CTA or CPO must file a completed 8-R form through NFA’s Online Registration System (ORS).

Proficiency Exams:
All individuals who solicit retail off-exchange forex business or who supervise that activity will be required to take and pass two exams. One is the National Commodity Futures Examination (NCFE or Series 3), which covers on-exchange futures trading theory, terminology, and regulation. The second exam is a new exam, Series 34. This hour-long exam consists exclusively of forex-related questions. NFA has published Study Guides for both exams in the Registration section of its website (www.nfa.futures.org).

Both exams are currently available and are administered by the Financial Industry Regulatory Authority (FINRA). The testing application form (U10) can either be downloaded or completed online athttp://www.finra.org/Industry/Compliance/Registration/CRD/FilingGuidance/index.htm.

Fingerprint Cards:
NFA requires all individual applicants to submit fingerprint cards, which are sent to the Federal Bureau of Investigation (FBI) to determine if the applicant has a criminal record. NFA can only accept and process a complete FBI Applicant card. These cards are available by contacting NFA’s Information Center at 800-621-3570. Applicants are encouraged to submit more than one set of fingerprints with their application to avoid delays in obtaining additional sets if necessary for processing.

NFA offers a fingerprinting service for NFA applicants at the Chicago office (300 South Riverside Plaza, Suite 1800) between the hours of 8:30 a.m. and 4:00 p.m. for $15 (cash, check or money order). In order to use NFA’s fingerprint service, visitors must be pre-registered in the building’s visitor registry. Visitors should contact NFA’s Information Center (either by phone at 312-781-1410 or send an email to information@nfa.futures.org) to pre-register their name and date of visit so they can receive access to NFA’s offices on the 18th floor. NFA recommends that visitors pre-register at least a day prior to their visit.

All individuals being fingerprinted will be required to present two forms of identification, one of which is a valid picture ID issued by a government agency, in order to verify the identity of the person being fingerprinted. NFA now submits digital images of fingerprints to the FBI for criminal background checks. Results are received in three days or less, and in some cases within several hours, resulting in a faster and more efficient registration process.

CFTC Registration Fees:
$200 non-refundable registration fee for each IB, CTA or CPO

$85 non-refundable registration fee for each principal and/or AP of an IB, CTA or CPO

NFA Membership Dues:
$750 non-refundable annual dues for each IB, CTA or CPO

The report also describes non-Minibonds agreements reached with two banks to repurchase Lehman Equity Index-linked Principal Protected Notes at 80% of the principal investment from over 500 customers who had bought such notes on or after 5 August 2008.

Other enforcement actions are also highlighted including jail terms of 26 to 30 months for four individuals who conspired to manipulate the share price of Asia Standard Hotel Group. This was the largest market manipulation case locally to date and the first indictable prosecution for this kind of offence under the Securities and Futures Ordinance (SFO).

During the reporting period, the SFC began consultation on proposals to transfer the regulation of public offers of structured products from the Companies Ordinance to the SFO as a technical sequel to the earlier consultation proposals to enhance investor protection. A joint-consultation on a proposed operational model for a scripless securities market was also issued.

The report also notes the signing of a declaration with the Securities Commission of Malaysia to provide mutual recognition of Islamic collective investment schemes as part of the SFC’s efforts to support the development of Islamic finance in Hong Kong.

The SFC’s mass-media and interactive investor education initiatives continued with high levels of activity. A plain-language booklet, The SFC Guide, was published to help the public better understand the SFC’s role in the overall financial regulatory structure. Activities designed to reach a wider segment of the investing public were also increased including a new initiative to partner with community organizations in delivering investor education seminars.

The Monetary Authority of Singapore (MAS) is consulting the public on recommendations to amend and enhance various features of the Deposit Insurance (DI) Scheme in Singapore.

2. As part of our regular review, MAS and the Singapore Deposit Insurance Corporation (SDIC) which administers the DI Scheme, have reviewed it to ensure that it continues to fulfill its primary objective of providing adequate protection to small depositors.

3. The consultation paper proposes to expand the scope of coverage under the DI Scheme, beyond the deposits of individuals and charities, to other non-bank depositors such as sole proprietorships, partnerships, companies and unincorporated entities.  The paper also proposes to raise the coverage limit under the DI Scheme by 2.5 times from S$20,000 to S$50,000 per depositor per Scheme member.  The increased coverage limit of S$50,000 would fully insure 91% of the expanded insured depositor base of individuals, charities and other non-bank depositors.  This compares to 83% of insured depositors who are fully insured currently under a S$20,000 coverage limit.  CPF monies placed with a Scheme member will be insured under a separate S$50,000 limit.

4. MAS invites interested parties to give their views and comments on the proposals contained in the Consultation Paper. (Click here to view the consultation paper). We will assess and consider all comments received before finalising the proposals and commencing the legislative process, with a view to implement the amendments to the DI Scheme by early 2011.  Please submit your written comments by 26 March 2010.

Note to Editor
The DI Scheme was implemented in 2006.  Its design was guided by several considerations which included the need to provide adequate protection for the majority of small depositors while limiting the cost of DI to Scheme members and depositors and preserving the incentives for large depositors to exercise market discipline.

The DI Scheme is administered by the Singapore Deposit Insurance Corporation (SDIC). For more information on the SDIC please refer tohttp://www.sdic.org.sg/

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