UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

In the Matter of: 

XP Investments US, LLC, 

Respondent.

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CFTC Docket No. 22-32

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTION 6(c) AND (d) OF THE COMMODITY EXCHANGE ACT, MAKING 

FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I. INTRODUCTION

The Commodity Futures Trading Commission (“Commission”) has reason to believe that 

from in or about May 2019 to at least June 2019 (“Relevant Period”), XP Investments US, LLC 

(“XP” or “Respondent”) violated Section 4g(a) of the Act (the “Act”), 7 U.S.C. § 6g(a), and 

Commission Regulations (“Regulations”) 1.31(b)(2) and 1.35(a)(1)(iii), 17 C.F.R. §§ 1.31(b)(2), 

1.35(a)(1)(iii) (2021). Therefore, the Commission deems it appropriate and in the public interest 

that public administrative proceedings be, and hereby are, instituted to determine whether 

Respondent engaged in the violations set forth herein and to determine whether any order should 

be issued imposing remedial sanctions. 

In anticipation of the institution of an administrative proceeding, Respondent has 

submitted an Offer of Settlement (“Offer”), which the Commission has determined to accept. 

Without admitting or denying any of the findings or conclusions herein, Respondent consents to 

the entry of this Order Instituting Proceedings Pursuant to Section 6(c) and (d) of the Commodity 

Exchange Act, Making Findings, and Imposing Remedial Sanctions (“Order”), and 

acknowledges service of this Order.1

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 Respondent consents to the use of the findings of fact and conclusions of law in this Order in 

this proceeding and in any other proceeding brought by the Commission or to which the 

Commission is a party or claimant, and agrees that they shall be taken as true and correct and be 

given preclusive effect therein, without further proof. Respondent does not consent, however, to 

the use of this Order, or the findings or conclusions herein, as the sole basis for any other 

proceeding brought by the Commission or to which the Commission is a party or claimant, other 

than: a proceeding in bankruptcy or receivership; or a proceeding to enforce the terms of this 
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II. FINDINGS 

 The Commission finds the following: 

A. SUMMARY 

XP failed to maintain certain audio recordings for dates in May and June 2019, which XP 

as a registered introducing broker, was required to make and keep for a period of not less than 

one year. This failure occurred because XP’s audio recording system was improperly installed 

by a third-party vendor following an office move. Once the error was discovered in June 2019, 

XP promptly took steps to remediate the problem. 

In accepting Respondent’s Offer, the Commission recognizes the cooperation of Respondent 

with the Division of Enforcement’s (“Division”) investigation of this matter. The Commission also 

acknowledges Respondent’s representations concerning its remediation in connection with this 

matter. 

B. RESPONDENT 

XP Investments US, LLC is a Delaware corporation with headquarters in New York, 

New York. XP provides brokerage services for non-deliverable forwards and other commodity 

interests. XP has been registered with the Commission as an introducing broker since 2012.

C. FACTS 

 Between April 12 and May 15, 2019, XP relocated its New York office, which was 

responsible for maintaining the relevant audio recording system. The audio recording system 

was improperly installed at the new office location by an external vendor, causing the 

inconsistent and incomplete recording of audio calls on twenty-five days in May and June 2019. 

In particular, the vendor failed to properly sync the system so that it would record audio for both 

handsets and speakers for XP’s turret system.2 Following installation of the recording system in 

the new office, XP conducted an unknown number of “spot checks” to confirm that calls were 

being recorded, but these checks failed to reveal a recording issue. Similarly, the system’s 

“heartbeat” outage warning system did not indicate errors in recording.3 

 

Order. Respondent does not consent to the use of the Offer or this Order, or the findings or 

conclusions in this Order, by any other party in any other proceeding.

2

 A trader turret is a communication device generally used by financial traders on their trading 

desks in place of a telephone. The trader turret is specifically designed for the traders’ high call 

volume and need to quickly place single-button outgoing calls. This was traditionally 

accomplished through use of multiple parallel phone lines but more recently with digital or 

internet protocol structures. 

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 XP had a back-up recording server in place, but, since some of the calls in question were not 

recorded in the first instance, they were not saved on the back-up server. 
3 

 XP discovered the audio recording issue in June 2019 when it attempted to locate a 

particular recording. XP personnel discovered that the vendor installation error had resulted in 

an intermittent failure to record calls from the speakers associated with the turrets.4

 The 

unrecorded calls included oral communications provided or received concerning quotes, 

solicitations, bids, offers, instructions, trading, and/or prices that led to the execution of a 

transaction in a commodity interest and/or related cash or forward transactions. 

 XP’s recording failures did not stem from a recording outage, a system without a backup, or technology that was obviously faulty or in a state of neglect. On the contrary, XP’s 

system actually recorded some audio during the Relevant Period, and the system maintained a 

“red flag” warning that did not trip due to its configuration by the external vendor. Shortly after 

discovering the missing audio, XP began steps to fully remediate this audio recording issue in 

2019. In addition to applying a technical fix to sync its recording system, XP enhanced its 

reporting logic channels to distinguish between speaker and handset calls; replaced its vendor; 

formalized its process of spot-checking recordings; and, in February 2020, instituted a 

surveillance trade reconstruction initiative which tests the capture of recordings attendant to 

trades. 

III. LEGAL DISCUSSION 

As a registered introducing broker, XP is required to comply with the recordkeeping 

obligations set forth in Section 4g(a) of the Act, 7 U.S.C. § 6g(a), and Regulations 1.31 and 1.35, 

17 C.F.R. §§ 1.31, 1.35 (2021). Specifically, Section 4g(a) of the Act requires introducing 

brokers and other records entities to keep books and records pertaining to transactions and 

positions in such form and manner and for such period as required by the Commission. 

Regulation 1.31(b)(2) provides that a records entity required to retain oral communications as 

part of its recordkeeping obligations shall keep those communications for a period of not less 

than one year from the date of the communication. Finally, Regulation 1.35(a)(1)(iii) requires 

introducing brokers, which have generated over the preceding three years more than $5 million 

in aggregate gross revenues from its activities as an introducing broker5

, to keep all oral 

communications provided or received concerning quotes, solicitations, bids, offers, instructions, 

trading, and prices that lead to the execution of a transaction in a commodity interest and any 

related cash or forward transaction. 

Recordkeeping includes the obligation of ensuring that the data has been correctly 

archived and the data will be able to be used. The failure to retain and promptly produce 

required records for inspection to the Commission constitutes a violation of Section 4g of the Act 

and Regulations 1.31 and 1.35. See, e.g., In re Woods, CFTC No. 15-02, 2014 WL 5089105, at 

*4-6, *8 (Oct. 8, 2014) (consent order) (finding that an introducing broker violated Section 4g of 

the Act and Regulations 1.31 and 1.35 by failing to preserve certain customer order records). 

 

4

 XP addressed the outage problem prior to the opening of the Division’s investigation. 

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 XP satisfies this element. 
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As detailed above, from May 1 to June 19, 2019, XP failed to retain twenty-five days of 

audio recordings that included communications concerning quotes, solicitations, bids, offers, 

instructions, trading, and/or prices leading to transactions in commodity interests and/or related 

forward transactions for the required one-year period set forth in Regulation 1.31(b)(2). 

Consequently, XP violated Section 4g(a) of the Act and Regulations 1.31(b)(2) and 

1.35(a)(1)(iii).

IV. FINDINGS OF VIOLATIONS 

Based on the foregoing, the Commission finds that, during the Relevant Period, XP 

Investments US, LLC violated Section 4g(a) of the Act, 7 U.S.C. § 6g(a), and Commission 

Regulations 1.31(b)(2) and 1.35(a)(1)(iii), 17 C.F.R. §§ 1.31(b)(2), 1.35(a)(1)(iii) (2021). 

V. OFFER OF SETTLEMENT 

Respondent has submitted the Offer in which it, without admitting or denying the 

findings and conclusions herein: 

A. Acknowledges service of this Order; 

B. Admits the jurisdiction of the Commission with respect to all matters set forth in this 

Order and for any action or proceeding brought or authorized by the Commission based 

on violation of or enforcement of this Order; 

C. Waives: 

1. The filing and service of a complaint and notice of hearing; 

2. A hearing; 

3. All post-hearing procedures; 

4. Judicial review by any court; 

5. Any and all objections to the participation by any member of the Commission’s 

staff in the Commission’s consideration of the Offer; 

6. Any and all claims that it may possess under the Equal Access to Justice Act, 

5 U.S.C. § 504, and 28 U.S.C. § 2412, and/or the rules promulgated by the 

Commission in conformity therewith, Part 148 of the Regulations, 17 C.F.R. 

pt. 148 (2021), relating to, or arising from, this proceeding; 

7. Any and all claims that it may possess under the Small Business Regulatory 

Enforcement Fairness Act of 1996, Pub. L. No. 104-121, tit. II, §§ 201–253, 110 

Stat. 847, 857–74 (codified as amended at 28 U.S.C. § 2412 and in scattered 

sections of 5 U.S.C. and 15 U.S.C.), relating to, or arising from, this proceeding; 

and 
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8. Any claims of Double Jeopardy based on the institution of this proceeding or the 

entry in this proceeding of any order imposing a civil monetary penalty or any 

other relief, including this Order; 

D. Stipulates that the record basis on which this Order is entered shall consist solely of the 

findings contained in this Order to which Respondent has consented in the Offer; and 

E. Consents, solely on the basis of the Offer, to the Commission’s entry of this Order that: 

1. Makes findings by the Commission that Respondent violated Section 4g(a) of the 

Act, 7 U.S.C. § 6g(a), and Commission Regulations 1.31(b)(2) and 1.35(a)(1)(iii), 

17 C.F.R. §§ 1.31(b)(2) and 1.35(a)(1)(iii) (2021); 

2. Orders Respondent to cease and desist from violating Section 4g(a) of the Act and 

Regulations 1.31(b)(2) and 1.35(a)(1)(iii); 

3. Orders Respondent to pay a civil monetary penalty in the amount of five hundred 

thousand dollars ($500,000.00), plus post-judgment interest within ten days of the 

date of entry of this Order; 

F. Represents that, as described above, it has remediated the recordkeeping problem that is 

the subject of this Order.

Upon consideration, the Commission has determined to accept the Offer. 

VI. ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

1. Respondent and its successors and assigns shall cease and desist from violating Section 

4g(a) of the Act, 7 U.S.C. § 6g(a), and Commission Regulations 1.31(b)(2) and 

1.35(a)(1)(iii), 17 C.F.R. §§ 1.31(b)(2), 1.35(a)(1)(iii) (2021). 

2. Respondent shall pay a civil monetary penalty in the amount of five hundred thousand 

dollars ($500,000.00) (“CMP Obligation”), within ten days of the date of the entry of this 

Order. If the CMP Obligation is not paid in full within ten days of the date of entry of 

this Order, then post-judgment interest shall accrue on the CMP Obligation beginning on 

the date of entry of this Order and shall be determined by using the Treasury Bill rate 

prevailing on the date of entry of this Order pursuant to 28 U.S.C. § 1961. 

Respondent shall pay the CMP Obligation and any post-judgment interest by electronic 

funds transfer, U.S. postal money order, certified check, bank cashier’s check, or bank 

money order. If payment is to be made other than by electronic funds transfer, then the 

payment shall be made payable to the Commodity Futures Trading Commission and sent 

to the address below: 

MMAC/ESC/AMK326 

Commodity Futures Trading Commission 
6 

Division of Enforcement 

6500 S. MacArthur Blvd. 

HQ Room 266 

Oklahoma City, OK 73169 

9-AMC-AR-CFTC@faa.gov 

 If payment is to be made by electronic funds transfer, Respondent shall contact Tonia 

King or her successor at the above address to receive payment instructions and shall fully 

comply with those instructions. Respondent shall accompany payment of the CMP 

Obligation with a cover letter that identifies the paying Respondent and the name and 

docket number of this proceeding The paying Respondent shall simultaneously transmit 

copies of the cover letter and the form of payment to the Chief Financial Officer, 

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, 

Washington, D.C. 20581. 

3. Respondent and its successors and assigns shall comply with the following conditions 

and undertakings set forth in the Offer: 

A. Public Statements: Respondent agrees that neither it nor any of its successors and 

assigns, agents or employees under its authority or control shall take any action or 

make any public statement denying, directly or indirectly, any findings or 

conclusions in this Order or creating, or tending to create, the impression that this 

Order is without a factual basis; provided, however, that nothing in this provision 

shall affect Respondent’s: (i) testimonial obligations; or (ii) right to take legal 

positions in other proceedings to which the Commission is not a party. 

Respondent and its successors and assigns shall comply with this agreement, and 

shall undertake all steps necessary to ensure that all of its agents and/or 

employees under its authority or control understand and comply with this 

agreement. 

B. Partial Satisfaction: Respondent understands and agrees that any acceptance by 

the Commission of any partial payment of Respondent’s CMP Obligation shall 

not be deemed a waiver of its obligation to make further payments pursuant to this 

Order, or a waiver of the Commission’s right to seek to compel payment of any 

remaining balance. 

C. Change of Address/Phone: Until such time as Respondent satisfies in full its 

CMP Obligation as set forth in this Order, Respondent shall provide written 

notice to the Commission by certified mail of any change to its telephone number 

and mailing address within ten calendar days of the change. 

D. Until such time as Respondent satisfies in full its CMP Obligation, upon the 

commencement by or against Respondent of insolvency, receivership or 

bankruptcy proceedings or any other proceedings for the settlement of 

Respondent’s debts, all notices to creditors required to be furnished to the 

Commission under Title 11 of the United States Code or other applicable law with 
respect to such insolvency, receivership bankruptcy or other proceedings, shall be 

sent to the address below: 

Secretary of the Commission 

Office of the General Counsel 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street N.W. 

Washington, DC 20581 

The provisions of this Order shall be effective as of this date. 

By the Commission. 

Christopher 

~h~ J. Kirkpatrick 

Secretary of the Commission 

Commodity Futures Trading Commission 

Dated: September 23, 2022 

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