CFTC fines XP Investments for failure to maintain audio recordings
The Commodity Futures Trading Commission (CFTC) issued an order today simultaneously filing and settling charges against introducing broker XP Investments US, LLC. The company is charged with failing to maintain certain records required to be kept under the Commodity Exchange Act (CEA) and CFTC regulations.
The order requires XP to pay a $500,000 civil monetary penalty and to cease and desist from any further violation of the CEA and CFTC regulations as charged.
Specifically, the order finds that XP failed to maintain certain audio recordings for dates in May and June 2019, which as a registered introducing broker, it was required to make and keep for at least one year.
This failure occurred after XP relocated its New York office, which was responsible for maintaining the relevant audio recording system. The audio recording system was improperly installed at XP’s new office location by an external vendor, causing the inconsistent and incomplete recording of audio calls on 25 days.
Neither spot checks nor XP’s “heartbeat” outage warning system detected the error. Only after XP could not find a specific recording, did it realize that there was an error. Once the error was discovered in June 2019, XP promptly took steps to remediate the problem.
The unrecorded calls included oral communications provided or received concerning quotes, solicitations, bids, offers, instructions, trading, and/or prices that led to the execution of a transaction in a commodity interest and/or related cash or forward transactions.