{"id":5375,"date":"2012-10-09T00:00:00","date_gmt":"2012-10-09T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/10\/cftc_securities_fraud_roundup_1"},"modified":"2022-04-28T13:58:43","modified_gmt":"2022-04-28T18:58:43","slug":"cftc-securities-fraud-roundup-1","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/cftc-securities-fraud-roundup-1\/","title":{"rendered":"CFTC Securities Fraud Roundup: Commissioner Bart Chilton Wants Financial System to Adopt Risk-Based Compensation System, Agency Nets $3M in Four Speculative Limits Cases, &#038; Two Registered Futures Entities Pay $539K Over Inadequate Supervision Allegations"},"content":{"rendered":"<p>According to Commodity Futures Trading Commission Bart Chilton, the financial system needs to undergo a \u201ccultural shift\u201d that should include employing a risk-based compensation structure instead of one that is \u201cpurely profit-based.\u201d Speaking at the Hard Assets Investment Conference last month, Chilton said that bonus systems and incentives create a \u201cpoisonous\u201d system in \u201cour financial corporate culture,\u201d compelling individuals to make earning as money as they can as quickly as they can their main priority.<\/p>\n<p>Chilton also talked about how the system inadequately, if at all, uses &#8220;puny penalties&#8221; to deal with \u201cbad behaviors&#8221; and that short-term profiteering is rewarded. He blames both results on the current compensation system employed by many financial firms. Risk management comes second under profit motive, with inducements generated to increase high risk trading, leverage, and the exploitation of funds. Chilton is recommending the implementation of a compensation system based on risk tolerance, with additional compensation and bonuses to be rewarded gradually. He believes that this will lead to longer-term strategies and actions, as well as \u201clonger-serving employees.\u201d He said that while the government may not be able to obligate financial firms to practice morality, it can takes steps to discourage misconduct by creating rules and laws that mandate good behavior.<\/p>\n<p>In other CFTC news, the agency recently settled four separate speculative limits violation cases for $3 million. On September 21, <a href=\"https:\/\/www.investorlawyers.com\/citigroup-background-information.html\">Citigroup Inc. (C) <\/a>and affiliate Citigroup Global Markets Ltd. consented to pay $525K to settle allegations that on the Chicago Board of Trade they went beyond the speculative position limits in wheat futures contracts. Four days later, Sheenson Investments Ltd., which is located in China, and its owner Weidong Ge consented to pay $1.5 million over allegations that they violated speculative limits in soybean and cotton futures.<\/p>\n<div class=\"read_more_link\"><a href=\"https:\/\/www.investorlawyers.com\/blog\/cftc-securities-fraud-roundup-1\/\"  title=\"Continue Reading CFTC Securities Fraud Roundup: Commissioner Bart Chilton Wants Financial System to Adopt Risk-Based Compensation System, Agency Nets $3M in Four Speculative Limits Cases, &#038; Two Registered Futures Entities Pay $539K Over Inadequate Supervision Allegations\" class=\"more-link\">Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>According to Commodity Futures Trading Commission Bart Chilton, the financial system needs to undergo a \u201ccultural shift\u201d that should include employing a risk-based compensation structure instead of one that is \u201cpurely profit-based.\u201d Speaking at the Hard Assets Investment Conference last month, Chilton said that bonus systems and incentives create a \u201cpoisonous\u201d system in \u201cour financial [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3810,3967,3741],"tags":[],"class_list":["post-5375","post","type-post","status-publish","format-standard","hentry","category-cftc","category-failure-to-supervise","category-securities-fraud"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>CFTC Securities Fraud Roundup: Commissioner Bart Chilton Wants Financial System to Adopt Risk-Based Compensation System, Agency Nets $3M in Four Speculative Limits Cases, &amp; Two Registered Futures Entities Pay $539K Over Inadequate Supervision Allegations &#8212; Investor Lawyers Blog &#8212; October 9, 2012<\/title>\n<meta name=\"description\" content=\"According to Commodity Futures Trading Commission Bart Chilton, the financial system needs to undergo a \u201ccultural shift\u201d that should include employing a &#8212; October 9, 2012\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/cftc-securities-fraud-roundup-1\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"CFTC Securities Fraud Roundup: Commissioner Bart Chilton Wants Financial System to Adopt Risk-Based Compensation System, Agency Nets $3M in Four Speculative Limits Cases, &amp; Two Registered Futures Entities Pay $539K Over Inadequate Supervision Allegations &#8212; Investor Lawyers Blog &#8212; 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