NFA to increase maximum monetary penalty for rule violations

Maria Nikolova

The maximum monetary penalty will increase to $500,000 per rule violation, effective August 31, 2020.

The United States National Futures Association (NFA) today published a notice regarding amendments to its rules concerning monetary penalties for firms that break the rules.

NFA Compliance Rule 3-14 outlines the types of penalties that an NFA disciplinary panel may impose at the conclusion of an NFA disciplinary proceeding. NFA recently amended this rule to increase the maximum monetary penalty to $500,000 per rule violation. The previous maximum size was $250,000 per violation.

This increase is intended to further deter violations of NFA requirements and provide NFA’s disciplinary panels with the flexibility needed in assessing penalties. These amendments will become effective on August 31, 2020.

Back in May, NFA explained that it has not encountered any issues with the current maximum penalty fine amount. However, NFA has not increased this amount since 1990, and NFA believes that the increase will help deter violations of NFA requirements and provide NFA’s disciplinary panels with the flexibility they need in determining penalties.

After the changes, the rules (Part 3 – Compliance Procedures; RULE 3-14. PENALTIES) will read:

“The Business Conduct Committee, BCC Panel or Hearing Panel, or the Appeals Committee on appeal or review, may at the conclusion of the disciplinary proceeding impose one or more of the following penalties:

(ii) Bar or suspension for a specified period from association with a Member;

(iii) Censure or reprimand;

(iv) A monetary fine, not to exceed $500,000 per violation;

(v) Order to cease and desist; and

(vi) Any other fitting penalty or remedial action not inconsistent with this rule.”

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