Nadex takes disciplinary action against one of its Members

Maria Nikolova

Nadex’s Compliance Department has recommended termination of Sun-Je Pearlman’s Nadex Membership and that he be permanently banned from the Exchange.

North American Derivatives Exchange, Inc. (Nadex), a subsidiary of IG Group Holdings plc (LON:IGG), has issued a notice detailing its disciplinary action and final decision against one of its Members.

The Member in question is Sun-Je Pearlman. Nadex’s findings show Mr Pearlman opened an account and started trading on June 29, 2016. He entered multiple transactions through the evening of July 4, 2016 and generated considerable profits. However, after his account reached its peak on July 4, he began losing and eventually lost approximately all of his profits as well as the deposits he had made to his account.

On July 6, 2016, Mr. Pearlman contacted Nadex Client Services alleging that his account had been hacked and that some deposits made to the account were unauthorized. In addition, he claimed that he did not enter numerous transactions that occurred in his account. More importantly, Mr. Pearlman requested a refund to reset his balance to its highest level, that is, the level from the evening on July 4.

Nadex’s Compliance Department conducted a thorough investigation of Mr. Pearlman’s claims, and did not find evidence to support his allegations. Therefore, there was no justification for a return of funds.

Having learnt of the Compliance Department’s decision not to refund any money, Mr. Pearlman initiated chargebacks for all deposits that had been made to his account, including those deposits he admitted he had made. Given that funds deposited to the account had already been used to trade, as the result of the chargebacks Mr. Pearlman’s account incurred a negative balance.

Nadex’s Compliance Department has determined that Mr Pearlman violated Rule 5.19(p) which prohibits a Member from making a false statement that would result in a chargeback, as well as Rule 5.19(q) which prohibits a Member from allowing his account to become negative, and requires that in the event the account becomes negative, he must immediately deposit additional funds to correct the deficiency.

The Compliance Department has recommended termination of Mr. Pearlman’s Nadex Membership and that he be permanently banned from the Exchange.

The effective date of the notice is February 2, 2017.

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