On Friday, September 14, CFTC issued an order finding that Mobius Risk Group LLC was an unregistered Commodity Trading Advisor (CTA). CFTC found that Mobius held itself out generally to the public as a CTA and had more than 15 clients. The Commodity Exchange Act defines a CTA as a person who for compensation or profit, engages in the business of advising others, either directly or through publications, writings or electronic media as to the value of or advisability of trading in, among other things, commodity futures, commodity options, swaps, and retail forex transactions. CTAs with more than 15 clients are required to register. The failure abide with this resulted in a settlement for Mobius with the CFTC, and civil penalty of $75,000.
The facts: Mobius acts as an independent energy risk advisory firm providing market guidance to producers, consumers, and capital market participants. During the relevant period, Mobius provided some clients with advice and recommendations concerning physical commodity trading. Mobius also provided certain clients with advice, reports, and/or analyses concerning value of or advisability of trading in over-the-counter (OTC) swaps and commodity options in oil, natural gas, and liquefied natural gas. For example, Mobius provided several clients with trading or hedging strategies, which included OTC swaps and/or commodity options for reducing client’s energy risks. Each client signed an agreement with Mobius for varying levels of services, some of which related to financial risk management. Mobius’ swaps and commodity options advisory services are part of its regular business. Clients paid a flat fee for Mobius’ technology and reporting, advisory services pertaining to physical and/or financial commodity trading, or a combination thereof. From at least October 2012 to August 15, 2018, Mobius made use of the mails, emails, telephone and the Internet, to conduct its business as a CTA. Mobius held itself out generally to the public as a CTA through, for example, its public website by offering risk management services to eligible contract participants on financial commodities such as oil, natural gas, interest rates, and foreign exchange, among other commodities. The services Mobius publicly offered included: (a) customized risk strategy development; (b) risk strategy management; (c) market analysis and monitoring; (d) market forecasting; and (e) trade execution (as agent). These various services include advice concerning OTC swaps and commodity options. In addition, during the course of the preceding twelve months, Mobius furnished commodity trading advice to more than fifteen persons. Such advisory services were not solely incidental to Mobius’ business.