Published September 27, 2013
CHICAGO – The U.S. Commodity Futures Trading Commission fined Vision Financial Markets $525,000 on Friday for illegally commingling customer money with company funds.
It was the second penalty this week against the broker, which raised its profile in the futures industry last year by absorbing the accounts of former customers of bankrupt brokerage Peregrine Financial Group.
David Stein, Vision's general counsel, could not be reached for comment. The firm agreed to settle with the CFTC in both instances without admitting or denying wrongdoing.
From August 2008 to June 2009, Vision used funds from commodity futures and options customers to buy corporate notes and bonds and then commingled those assets with its own funds and the funds of its securities customers, the CFTC said.
Customer funds are supposed to be "segregated," or kept separate, so the money can be available for clients to trade with or withdraw.
Vision's violations went undetected because the broker did not notify regulators that the amount of money in segregated accounts did not meet requirements, according to the CFTC.
The agency requires that customer funds be separately accounted for and that brokers hold sufficient funds in customer segregated accounts to meet their obligations to clients.
Vision "misstated in monthly segregation statements filed with the commission the location and manner in which the customer funds were being held," the CFTC said.
The violations were discovered during a regulatory check in June 2009, according to the CFTC, which did not explain why it did not impose the fine until now.
The CFTC on Tuesday fined Vision $140,000 for failing to supervise employees handling futures accounts in 2012.
Peregrine's trustee, Ira Bodenstein, selected Vision to take on customer accounts last year because Vision offered the highest bid, said Robert Fishman, a lawyer for the trustee. Vision paid about $325,000.
"We'd never heard of them before," Fishman said about Vision on Friday. "Their bid was the best bid and that was all we needed to know about it."
Peregrine collapsed in July 2012 after founder Russell Wasendorf Sr. attempted suicide and confessed to stealing tens of thousands of dollars from customers over two decades.
(Reporting by Tom Polansek; Editing by Carol Bishopric and Ken Wills)