The Commodity Futures Trading Commission (CFTC) has ordered Netrios LP Ltd. and Red Acre Ltd. to pay a combined $2.5 million in civil penalties for facilitating illegal off-exchange leveraged retail commodity transactions involving U.S. customers.
Under the settlement, Netrios will pay a $1.75 million penalty, while Red Acre will pay $750,000. Both firms were also ordered to cease and desist from future violations.
The CFTC found that Netrios provided services that enabled offshore trading platforms to offer leveraged or margined retail commodity transactions to U.S. customers who did not qualify as eligible contract participants. According to the regulator, those activities could be lawfully conducted only through a CFTC-registered exchange.
The regulator also found that Red Acre supported Netrios by providing customer and operational services, concluding that the company aided and abetted the unlawful conduct.
Separately, the U.S. Securities and Exchange Commission announced parallel settled charges against the two firms based on the same underlying conduct.
The CFTC said it worked with the SEC during its investigation and acknowledged assistance from the Central Bank of Ireland, the Financial Services Authority of Seychelles, and the Malta Financial Services Authority.
