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MBH COMMODITY ADVISORS, INC
CASE OUTCOME: EXPELLED FROM MEMBERSHIP
• FINE $200,000
NFA ID:
0001782
Complaint:
ON DECEMBER 31, 1996, NFA'S BUSINESS CONDUCT COMMITTEE ("BCC") ISSUED A COMPLAINT TO MBH COMMODITY ADVISORS, INC. ("MBH") AND JACOB BERNSTEIN ("BERNSTEIN"). THE COMPLAINT ALLEGES THAT MBH AND BERNSTEIN USED MISLEADING AND DECEPTIVE PROMOTIONAL MATERIAL, IN VIOLATION OF NFA COMPLIANCE RULES 2-29(a)(1), 2-29(b)(1), AND 2-29(b)(2). IN ADDITION, THE COMPLAINT ALLEGES THAT MBH AND BERNSTEIN USED PROMOTIONAL MATERIAL THAT MENTIONED THE POSSIBILITY OF PROFIT AND FAILED TO MENTION THE RISK OF LOSS IN AN EQUALLY PROMINENT MANNER, IN VIOLATION OF NFA COMPLIANCE RULE 2-29(b)(3). FURTHER, THE COMPLAINT ALLEGES THE MBH AND BERNSTEIN USED PROMOTIONAL MATERIAL WHICH STATES THAT FUTURES TRADING IS APPROPRIATE FOR ALL PERSONS, IN VIOLATION OF NFA COMPLIANCE RULE 2-29(a)(3). FINALLY, THE COMPLAINT ALLEGES THAT MBH AND BERNSTEIN USED PROMOTIONAL MATERIAL WHICH CONTAINED HYPOTHETICAL RESULTS WITHOUT INCLUDING THE REQUIRED DISCLAIMER, IN VIOLATION OF NFA COMPLIANCE RULE 2-29(c)(1). Decision:
ON MAY 5, 1998, A DESIGNATED PANEL OF NFA'S HEARING COMMITTEE ISSUED A DECISION TO MBH AND BERNSTEIN AFTER A HEARING WAS HELD. AFTER CONSIDERING ALL OF THE RELEVANT TESTIMONY AND DOCUMENTARY EVIDENCE PRESENTED AT THE HEARING, THE PANEL FOUND THAT MBH AND BERNSTEIN VIOLATED NFA COMPLIANCE RULES 2-29(a)(1), 2-29(b)(1), 2-29(a)(3), 2-29(b)(3), AND 2-29(c)(1). THE PANEL ALSO FOUND THAT MBH'S AND BERNSTEIN'S CONDUCT IS INCONSISTENT WITH JUST AND EQUITABLE PRINCIPLES OF TRADE. AS A RESULT OF ITS FINDINGS, THE PANEL EXPELLED MBH FROM NFA MEMBERSHIP AND BARRED BERNSTEIN FROM ASSOCIATION WITH OR BEING A PRINCIPAL OF ANY NFA MEMBER. THE PANEL ALSO ORDERED MBH AND BERNSTEIN TO PAY A $200,000.00 FINE. MBH AND BERNSTEIN ARE JOINTLY AND SEVERALLY LIABLE FOR THE FINE. THIS DECISION BECOMES EFFECTIVE MAY 20, 1998. APPEAL - On May 7, 2001, the Seventh Circuit issued a Decision affirming the CFTC's Order.
Source: National Futures Association
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