Unfortunately, there are times when a commodity broker does not act in the best interest of the client. Fortunately, the National Futures Association may be able to help you if your commodity broker improperly handled your account.
The National Futures Association (NFA) is the self-regulation organization that oversees the commodity futures markets. To file a complaint against a commodity broker or someone dealing in the futures markets, you can call the National Futures Association at 1-312-781-1300 or you can file an online complaint at www.nfa.futures.org/basicnet/Complaint.aspx. Now, before you file a complaint, we should go over some legitimate reasons why you might file a complaint.
Legitimate Complaints Against Commodity Brokers
Trading without authorization – This is an easy one. If a commodity broker places trades without your knowledge and he or she does not have discretion over your account, you certainly have a good case to file a complaint.Churning accounts – This occurs when a commodity broker places trades for the sake of solely generating commissions. You have better grounds for a complaint if the broker has discretion over your account. If you agree to all the trades that are placed, it may be more difficult to make a case. However, an unsophisticated investor who relies on the advice of a broker may still have a good case.
Some of the other common complaints involve high-pressure sales tactics, misleading statements and downplaying risks involved in futures trading.
Questionable Complaints Against Commodity Brokers
You’ll notice I didn’t mention “losses” in the above section. Most investors believe they have a legitimate complaint against a commodity broker if they lose money. That is actually a weak complaint. The fact is that most people who trade commodities lose money. The broker may not be the best commodity trader, but as long as you knew the risks going in and he put a good effort forward to help you make money, you may not have much recourse.Many clients also complain about not being contacted regularly. Unfortunately, most commodity brokers don’t like to call clients when they are losing money. However, there really aren’t any rules against this behavior. You can always call your broker for an update and most brokers allow you to check your account statements online in real time.
Before you file a complaint, or contemplate it, you should probably discuss the situation with your broker to see if you can resolve it. That is usually the solution to most problems. If you do file a complaint with the National Futures Association, there is a good chance you will have to go through arbitration to resolve the dispute. You probably signed an agreement to use arbitration when you opened your account. This is much quicker and more cost-effective than the court system.
If in doubt, feel free to contact the National Futures Association about your situation. They will let you know if there is some credence to your complaint. There is also a chance that the National Futures Association could be building a case against an unscrupulous brokerage firm and you might be just one of many complaints.
