The National Futures Association has put out an emergency enforcement action against J Hansen Investments LLC and Jonathan Hansen, who is the financial firm’s principal. The Houston, Texas financial firm is a commodity pool operator and an NFA member.
NFA actions taken against JHI and Hansen are the Associate Responsibility Action and the Member Responsibility Action. The Houston financial firm and its principal are accused of failing to cooperating with NFA during a firm examination.
NFA began an unannounced exam of JHI following the latter’s submission of its yearly questionnaire. On it, the financial firm noted that it was running as a commodity pool despite the fact that it had no commodity pools listed with the NFA, never turned in a disclosure document with the association, and lacks CFTC exemptions.
Because JHI allegedly did not cooperate with NFA, the association says that it cannot verify the fund sources in the pool and client trading accounts, the fund sources in trading accounts under the names of JHI and Hansen (this is where the pool and client trading account are held), and the number of commodity pool participants.
NFA has suspended the association membership of Hansen and JHI. Both are not allowed to place trades in any accounts. They also cannot transfer or distribute from client funds.
NFA says this action goes into effect right away. The association considers the move necessary to protect clients of Hansen and JHI. Both the ARA and MRA will stay in effect until Hansen and JHI show the NFA that they meet all association requirements. Both are entitled to a hearing before the NFA should they choose to pursue one.
Commodity Pool Operator
A CPO is an organization or person that runs a commodity pool, soliciting funds for it. The funds, which are usually contributed by several individuals, are pooled together to trade futures contracts, retail off-exchange forex contracts, and options on futures, and invest in other commodity pools. Registration is mandatory unless the CPO is qualified under certain exemptions, such as those:
• That are regulated otherwise.
• Operating one or more smaller pools with under $400K in aggregate capital contributions and have no more than 15 participants/pool.
• Running pools that don’t commit more than 10% of their assets’ fair market value to set up commodity interest trading positions. Commodity interest is traded in a way that is incidental to securities trading.
• With pools only open to individuals that satisfy specific financial standards. These pools trade options on futures or futures within specific limits.
• With pools that are only open to persons meeting a certain financial standard or net worth.
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