Kicked Out Of The Club: NFA Orders Commodity Pool Operator Not To Reapply For NFA Membership – Commodities/Derivatives/Stock Exchanges

On 10 April 2024, the National Futures Association’s (NFA)
Business Conduct Committee (BCC) issued an order against 50.ai
Investments LLC, a former NFA Member commodity pool operator and
forex firm. The order stipulates that 50.ai Investments may not
reapply for NFA membership or act as a principal of an NFA Member
at any time in the future due to violating a suite of NFA
compliance rules.

The order also requires that Hemant Jindal, a former associated
person and principal of the company, may not reapply for NFA
membership or act as a principal of an NFA Member for a period of
30 months. Jindal is further ordered to pay a $50,000 fine if,
after the expiration of the 30-month period, he reapplies for NFA
membership or seeks to become a principal of an NFA Member.

The BCC’s Complaint and Decision serve as a prudent reminder for NFA
Members to review and update written policies and procedures
related to supervision and marketing materials, particularly
regarding hypothetical performance.

The BCC alleged that 50.ai Investments and Jindal used deceptive
and misleading promotional material and other communications and
presentations that offered a distorted view of the likelihood of
customers receiving dramatic profits through investing in the firm.
The communications substantially inflated hypothetical performance,
without disclosing that such performance was hypothetical or
maintaining records to substantiate the claims. The BCC further
found that 50.ai Investments and Jindal continued distributing
promotional materials with knowledge that they were misleading and
failed to “adhere to high standards of commercial honor and
just and equitable principles of trade” by doing so. It was
also alleged that 50.ai Investment and Jindal failed to properly
supervise firm operations and employees and lacked proper
compliance policies and procedures.

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