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FCStone LLC Reaches Settlement With CFTC

Stocks in this article: INTL

NEW YORK, May 29, 2013 (GLOBE NEWSWIRE) -- INTL FCStone Inc. announced today that its wholly-owned subsidiary, FCStone LLC ("FCStone" or "the Company"), has reached a settlement with the Commodity Futures Trading Commission ("CFTC") in connection with transactions by former FCStone customers that took place between January 1, 2008 and March 1, 2009 and that resulted in the losses of approximately $127 million previously reported by FCStone in 2008 and 2009. The settlement follows an investigation begun by the CFTC in November 2011 and a September 2012 Wells notice, previously disclosed in the public filings of INTL FCStone Inc.

The CFTC's findings, neither admitted nor denied by FCStone, are that the Company violated Regulation 166.3, 17 C.F.R. §166.3 in that it failed to diligently supervise its officers' and employees' activities relating to risks associated with its customers' accounts, and in particular one account controlled by two of FCStone's customers who traded in natural gas futures, swaps and option contracts.

The settlement, with appropriate waivers and consents, requires FCStone to:

  • cease and desist from violating Regulation 166.3, 17 C.F.R. §166.3;
  • pay $1.5 million to the CFTC; and
  • appoint an independent third party reviewer to review and evaluate FCStone's existing policies and procedures relating to certain risks, to ensure that the Company has made sufficient modifications to its risk controls since 2008.

The Company and its parent, INTL FCStone Inc., provided for the possibility of a $1.5 million fine in their financial statements for the quarter ended December 31, 2012.

Sean O'Connor, INTL FCStone Inc.'s Chief Executive Officer, said "We are fully committed to working within a risk and compliance framework that protects our customers' and our firm's assets."

About INTL FCStone Inc.

INTL FCStone Inc. (INTL) provides execution and advisory services in commodities, currencies and international securities. INTL's businesses, which include the commodities advisory and transaction execution firm FCStone Group, serve more than 20,000 customers in more than 100 countries through a network of offices in twelve countries around the world.

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