♦Avoid the Failure-to-Supervise Trap♦
Increasingly, regulators are viewing a failure to train employees as a supervisory lapse.
For example, disciplinary actions issued Jan. 30 by the NYMEX Business Conduct Committee included fines of $70,000 and $60,000 against two firms for block trade reporting violations and for failing to properly train their employees on relevant Exchange rules. Failure to train was deemed to be a violation of CME Group General Offenses Rule 432.W: Failure to supervise.
In October, the CFTC fined a firm $5 million for supervisory failures relating to EFRP trading, noting that no formal training had been provided to staff. In September, a $25 million CFTC spoofing settlement included a commitment for the subject firm to provide ongoing market conduct training to its employees.
We can help firms demonstrate that robust training has been provided to employees. Our Noncompetitive Trading training lays the groundwork for correct block trade and EFRP conduct, and our Market Conduct course covers a wide range of prohibited practices, including, of course, spoofing. Proof of relevant training can also provide valuable protection for a firm when a non-compliant employee claims ignorance of the rules.
Don’t let failure to train turn into a costly failure-to-supervise charge.
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“It shall be an offense for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.” – CME Group Rule 432.W
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