ADM Investor Services fined $425K for commingling customer funds

Reuters

By Karl Plume

CHICAGO, Sept 30 (Reuters) - The U.S. Commodity FuturesTrading Commission fined futures brokerage ADM Investor ServicesInc $425,000 for commingling customer funds with funds from itsnon-customer accounts, the top U.S. derivatives regulator saidMonday in a release.

As a futures commission merchant, ADM Investor Services,which is a fully owned subsidiary of U.S. agribusiness giantArcher Daniels Midland, is required to keep customerfunds segregated from other accounts per Section 4d(a)(2) of theCommodity Exchange Act.

CFTC found that ADMIS violated the rule when it treated theaccounts of certain ADM-owned affiliates as customer accountsprior to July 2011.

"The CFTC Order finds that as a result of ADM's ownershipand voting interests in ADMIS and the affiliates, ADMIS wasprohibited from commingling its customers' funds with funds heldin the affiliates' accounts." the regulator said.

ADMIS said it cooperated fully with the investigation andhas updated its procedures to ensure compliance with CFTC rules.

"No ADMIS customer suffered any financial loss as a resultof the account classification that was the subject of thesettlement," said Thomas Kadlec, president of ADM InvestorServices.

"The Commission has not alleged or found that ADMIS profitedfrom the classification of these accounts as customer accounts,nor have they alleged or found that we intended to profit fromit," he said.

Lax protection of customer funds contributed to the collapseof futures brokerage MF Global in October 2011, which leftclients short of $1.6 billion, investigators determined.

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