US-based operation of Brazilian broker XP fined $500,000 for recordkeeping failures

Rick Steves

“Proper recordkeeping is vital to protecting our markets and market participants from fraud and manipulation. This case serves as another example of the Commission’s intent to vigorously enforce the recordkeeping obligations of its registrants.”

The Commodity Futures Trading Commission has ordered XP Investments US, LLC (XP) to pay $500,000 in a civil monetary penalty for failing to maintain certain records required to be kept under the Commodity Exchange Act (CEA) and CFTC regulations.

The regulated simultaneously filed and settled charges with the New York-based Delaware corporation, which will also “cease and desist from any further violation of the CEA and CFTC regulations”.

XP Investments US, LLC d/b/a XP Private, is a member of FINRA, SIPC, and NFA. XP Private provides brokerage services in the United States through XP Investments US, LLC. The distribution of products by XP Private is intended only for the United States do America. The firm is a subsidiary of Brazilian brokerage firm XP.

“Proper recordkeeping is vital to protecting our markets”

CFTC Acting Division of Enforcement Director Gretchen Lowe, said: “Proper recordkeeping is vital to protecting our markets and market participants from fraud and manipulation. This case serves as another example of the Commission’s intent to vigorously enforce the recordkeeping obligations of its registrants.”

According to the CFTC, XP failed to maintain certain audio recordings for dates in May and June 2019, which as a registered introducing broker, it was required to make and keep for at least one year.

This failure occurred after XP relocated its New York office, which was responsible for maintaining the relevant audio recording system. The audio recording system was improperly installed at XP’s new office location by an external vendor, causing the inconsistent and incomplete recording of audio calls on 25 days.

Neither spot checks nor XP’s “heartbeat” outage warning system detected the error. Only after XP could not find a specific recording, did it realize that there was an error. Once the error was discovered in June 2019, XP promptly took steps to remediate the problem.

The unrecorded calls included oral communications provided or received concerning quotes, solicitations, bids, offers, instructions, trading, and/or prices that led to the execution of a transaction in a commodity interest and/or related cash or forward transactions.

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