US CFTC fines Vision Financial for second time this week

Reuters

By Tom Polansek

CHICAGO, Sept 27 (Reuters) - The U.S. Commodity FuturesTrading Commission fined Vision Financial Markets $525,000 onFriday for illegally commingling customer money with companyfunds.

It was the second penalty this week against the broker,which raised its profile in the futures industry last year byabsorbing the accounts of former customers of bankrupt brokeragePeregrine Financial Group.

David Stein, Vision's general counsel, could not be reachedfor comment. The firm agreed to settle with the CFTC in bothinstances without admitting or denying wrongdoing.

From August 2008 to June 2009, Vision used funds from commodity futures and options customers to buy corporate notesand bonds and then commingled those assets with its own fundsand the funds of its securities customers, the CFTC said.

Customer funds are supposed to be "segregated," or keptseparate, so the money can be available for clients to tradewith or withdraw.

Vision's violations went undetected because the broker didnot notify regulators that the amount of money in segregatedaccounts did not meet requirements, according to the CFTC.

The agency requires that customer funds be separatelyaccounted for and that brokers hold sufficient funds in customersegregated accounts to meet their obligations to clients.

Vision "misstated in monthly segregation statements filedwith the commission the location and manner in which thecustomer funds were being held," the CFTC said.

The violations were discovered during a regulatory check inJune 2009, according to the CFTC, which did not explain why itdid not impose the fine until now.

The CFTC on Tuesday fined Vision $140,000 for failing tosupervise employees handling futures accounts in 2012.

Peregrine's trustee, Ira Bodenstein, selected Vision to takeon customer accounts last year because Vision offered thehighest bid, said Robert Fishman, a lawyer for the trustee.Vision paid about $325,000.

"We'd never heard of them before," Fishman said about Visionon Friday. "Their bid was the best bid and that was all weneeded to know about it."

Peregrine collapsed in July 2012 after founder RussellWasendorf Sr. attempted suicide and confessed to stealing tensof thousands of dollars from customers over two decades.

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