I am not an attorney. But the Commodity Exchange Act has a fairly narrow window of fiduciary obligations for FCM's. The Agents of the FCM of course are liable for any representations they make to clients. But most of the CEA and CFTC legislation involves the segregation of customer funds when it comes to FCM's. The FCM customer documents talk about how big market moves might not allow the customer to get out of a position. TBH, in terms of "suitability" and risk most of the fiduciary onus is on the CTA and the Associated Persons in the investment fund. The FCM's responsibility for babysitting customer's risk in terms of "suitability" is really minimal.
Remember this pathetic option seller who lost $150 million for shorting natural gas and crude naked?
- Thread starter JSOP
- Start date
ok but they should still be liable for using IRA funds on margin for the investment; if that could be proven at least the clients' loss on margin and the interest on them can be cancelled. I feel so sorry for the clients.
Yes, if anyone at FC Stone had knowledge that customers were using IRA funds for futures trading then that would be a huge issue for them.
Well FC Stone is the custodian of their clients' assets and the clients' funds are directly deposited with them as they are the FCM; Cordier is just the advisor so I don't know how much they can feign unawareness of it.
You've got it backwards. I passed the Series 3 exam. Who did the customers sign over power of attorney to make trades on their behalf? Not FC Stone, clearly. There wouldn't even be a lawsuit if that were the case.
