US derivatives market regulator the National Futures Association (NFA) has announced that it has permanently barred LTG Trading LLC, a former NFA Member and current CFTC registered introducing broker located in Orland Park, Illinois, from membership and from acting as a principal of an NFA Member.

The NFA also barred Gary Fullett, LTG’s former sole principal and associated person, from NFA membership and from acting as a principal of an NFA Member for five years.

The decision, issued by an NFA Hearing Panel, is based on a Complaint issued by NFA’s Business Conduct Committee and a settlement offer submitted by LTG and Fullett. The Panel found that LTG and Fullett failed to uphold high standards of commercial honor and just and equitable principles of trade. The Panel also found that LTG and Fullett failed to obtain the required written authorizations from customers to trade their accounts on a discretionary basis, made misleading and deceptive sales solicitations and used misleading and deceptive promotional material.

The Complaint alleged that LTG and Fullett violated NFA Compliance Rule 2-4 by placing trades in customer accounts that had extremely high commissions and fees that produced commissions for LTG and Fullett but appeared to offer little to no economic benefit for their customers. Additionally, the Complaint alleged that LTG and Fullett failed to obtain a written power of attorney from some customers that authorized them to exercise discretionary trading authority over their accounts, in violation of NFA Compliance Rule 2-8(a).

The Complaint further alleged that Fullet failed to adequately disclose the amount of commissions and fees before the trades were placed and failed to explain how the commission and fee charges impacted a customer’s ability to profit, in violation of NFA Compliance Rule 2-4. Furthermore, the Complaint alleged that LTG and Fullett violated NFA Compliance Rules 2-2(a), 2-29(a)(1), 2-29(b)(1) and 2-29(b)(2) by making misleading and deceptive sales solicitations and using misleading and deceptive promotional material that falsely touted positive performance, misrepresented customer performance and failed to disclose that Fullett and LTG intended to employ an out-of-the-money option trading strategy.

LTG and Fullett submitted an Offer in which they neither admitted nor denied the allegations of the Complaint. Further, LTG agreed to withdraw from NFA membership within 30 days of the entry of a Decision accepting the Offer and, thereafter, be permanently barred from NFA membership, associate membership and principal status. Additionally, Fullett agreed to withdraw from NFA associate membership and principal status with all NFA Members within 30 days of the entry of a Decision accepting the Offer and, thereafter, be barred from NFA membership, NFA associate membership and acting as a principal of any NFA Member for a period of five years after the date of each respective withdrawal from NFA associate membership and principal status. Fullett further agreed that if he obtains NFA membership, associate membership or principal status with an NFA Member after the five-year bar, he would be liable for the payment of a $50,000 fine to NFA within 30 days of attaining such status.

In making the Offer, LTG and Fullett acknowledged that any Decision accepting their Offer would include findings that they committed the violations alleged against them in the Complaint and further agreed that the Offer and any Decision accepting their Offer may be used in an action to enforce the terms thereof or in any subsequent proceeding where they may be considered as evidence in aggravation.

Pursuant to the Offer, the Panel finds that LTG and Fullett violated NFA Compliance Rule 2-4 by their failure to uphold the high standards of commercial honor and just and equitable principles of trade expected of NFA Members and Associates. Additionally, the Panel finds that LTG and Fullett violated NFA Compliance Rule 2-8(a) by failing to obtain the required written authorization from customers to trade their accounts on a discretionary basis. The Panel further finds that Fullett and LTG violated NFA Compliance Rules 2-2(a), 2-29(a)(1), 2-29(b)(1) and 2-29(b)(2) by making misleading and deceptive sales solicitations and by using misleading and deceptive promotional material.

Having considered this matter and having accepted the Offer made by LTG and Fullett, the Panel hereby orders LTG to withdraw from NFA membership status within 30 days of the entry of this Decision and, thereafter, be permanently barred from NFA membership, NFA associate membership and principal status. Additionally, the Panel further orders Fullett to withdraw from NFA associate membership and principal status with all NFA Members within 30 days of the entry of this Decision and, thereafter, be barred from NFA membership, NFA associate membership and acting as a principal of any NFA Member for a period of five years from the date of each respective withdrawal from NFA associate membership and principal status. The Panel further orders that in the event Fullett obtains NFA membership, associate membership or principal status with an NFA Member after the five-year bar, Fullett is liable for the payment of a $50,000 fine to NFA within 30 days of attaining such status.

This Decision and the Offer may be used in an action to enforce the terms thereof or in a subsequent disciplinary action or regulatory action, where they may be considered as disciplinary history and as evidence in aggravation on the issue of sanctions.

Pursuant to Commodity Futures Trading Commission (CFTC) Regulation 1.63, this Decision and the sanctions imposed herein render Fullett permanently ineligible to serve on a disciplinary committee, arbitration panel, oversight panel or governing board of any self-regulatory organization, as that term is defined in CFTC Regulation 1.63.