US regulatory body National Futures Association (NFA), the self-regulatory organization for the US derivatives industry, has ordered X-Change Financial Access LLC (XFA) to pay a $400,000 fine. XFA is an NFA Member introducing broker located in Chicago, Illinois, owned by Marex Group plc (NASDAQ:MRX).
The Decision, issued by an NFA Hearing Panel, is based on a Complaint issued by NFA’s Business Conduct Committee (BCC) and a settlement offer submitted by XFA, in which the firm neither admitted nor denied the allegations in the Complaint. The Decision found that XFA failed to keep full, complete and systematic records of all transactions and maintain pre-trade communications, in violation of NFA Compliance Rule 2-10(a); allowed two unregistered individuals to act as associated persons (AP) without being NFA Associates, in violation of NFA Bylaw 301(b); and failed to adequately supervise the firm’s operations and employees, in violation of NFA Compliance Rule 2-9(a).
The Hearing Panel’s Decision also ordered Timothy Francis Hendricks (Hendricks), a principal and AP of XFA, to share liability with the firm, jointly and severally, for $100,000 of the $400,000 fine. The Decision further ordered Hendricks not to act in a supervisory capacity for XFA or any other NFA Member for a period of 90 days.
In a separate Decision, the Hearing Panel ordered Peter Gordon Scheffler (Scheffler), a former principal and AP of XFA, not to reapply for NFA membership, associate membership or principal status through December 31, 2024, and to pay a $150,000 fine if he subsequently seeks NFA membership or principal status. The Decision further ordered Scheffler not to be employed as a supervisor by, or act in a supervisory capacity for, any NFA Member through March 31, 2025.
The Hearing Panel’s Decisions against Hendricks and Scheffler are based on the same Complaint issued by the BCC against XFA and settlement offers submitted by Hendricks and Scheffler, in which they neither admitted nor denied the allegations in the Complaint. The Decisions each found that Hendricks and Scheffler failed to adequately supervise the firm’s operations and employees, in violation of NFA Compliance Rule 2-9(a).
The complete text of the Complaint, the XFA and Hendricks Decision and the Scheffler Decision can be viewed on NFA’s website.
