The Commodity Futures Trading Commission fined Jonathan Hansen and his company Newport Private Capital, LLC US $350,000 and permanently banned them from trading CFTC-overseen commodity interests and from registering with the Commission for engaging in a prohibited post-execution allocation “cherry-picking” scheme and failing to keep required records.
The CFTC order alleged that between September 2013 and January 2014, after the National Futures Association previously issued an order prohibiting respondents from withdrawing money from any trading accounts they controlled without NFA’s approval, Mr. Hansen caused an account to be opened in his spouse’s name. Afterwards, Mr. Hansen entered bunched orders on behalf of his customers without specifying at the time which customer accounts were associated with the trades contrary to an applicable rule (click here to access CFTC regulation, Rule 1.35(b)(5)). Subsequently, if the bunched orders were profitable, Mr. Hansen would allocate those orders to the account owned by his wife (and not to customers) and eventually transfer these profits to a joint bank account in his and his wife’s name. In 2014, Mr. Hansen and Newport agreed to withdraw their NFA membership and never reapply to resolve an NFA complaint regarding this matter (click here for details).
Brokers dealing with Mr. Hansen and Newport have also been subject to enforcement and disciplinary actions related to this matter. (For further background, click here to access the article “Introducing Broker and Principal Sanctioned by CFTC for Not Overseeing Unlawful Post-Trade Allocations of CTA Client” in the September 23, 2018 edition of Bridging the Week; here for the article “CFTC and NFA Sanction FCM for Handling of Post-Trade Allocations by Trading Manager” in the August 5, 2018, edition of Bridging the Week; and here to review the article “Former FCM Fined by CFTC and NFA for Processing CPO Client’s Unlawful Post-Trade Allocations Despite Red Flags” in the June 3, 2018 edition of Bridging the Week.)