U.S. derivatives regulators have settled with a Toronto-based futures trading firm over a couple of violations caused by its efforts to transfer funds for a client.

The U.S. Commodity Futures Trading Commission (CFTC) announced that it settled with Friedberg Mercantile Group, Inc., a registered futures commission merchant (FCM) and subsidiary of Canadian broker-dealer Friedberg Mercantile Group, Ltd., with the firm agreeing to pay a US$70,000 civil monetary penalty.

The case stems from a couple of alleged rule violations that occurred when the firm tried to transfer US$300,000 for a client. The CFTC order found that the firm’s handling of a client’s request to transfer US$300,000 of segregated funds to secured funds caused Friedberg to be under its secured amount requirement by approximately US$240,000; and, the subsequent movement of funds to its secured account resulted in the firm improperly commingling customer funds with its proprietary funds. Additionally, the regulator says that the firm failed to notify the CFTC of the deficiency in a timely way.

“Friedberg stated that it transferred the funds through its house account because staff incorrectly believed that the NFA advised them that the CFTC’s new Dodd Frank rules prohibited FCMs from transferring customer funds directly from a segregated account to a secured account. The firm has ceased that practice,” the order states; adding that the firm has implemented new procedures to prevent a similar violation.