We haven’t pulled any punches in our criticism of the NFA following the PFGBest scandal, believing all of it to be 100% warranted and in the best interest of both our clients and the futures of the industry. Actually, we did decide against forever referring to NFA President Dan Roth as Damn Roth, while reserving the right to do that within our offices, but that’s not the point.

Not a day goes by that we don’t hear from people in the industry who are grateful for our work and indictment of the NFA, but we still find ourselves standing alone in many of these efforts. An email today may shine light on why many firms are remaining quiet:

I wanted to reach out to you with some thoughts I have regarding the NFA.  First, I sincerely admire you guys for sticking your neck out and calling them out.  So many entities/traders/myself have the same opinion but are afraid to say anything at the risk of attracting unwanted attention.  BTW, I did sign the letter you sent out.

An acquaintance of mine recently went through an NFA audit and it would appear that nothing has changed [since the MF Global or PFG scandals].  Minimal amount of time was spent on auditing/cross checking funds… & accounting… while the next 10 days were spent nitpicking on promotional material.  As an investor, the most important things to me…1) Are my funds safe  2) Is the accounting accurate.  In that regard, I know there is quite a bit of finger pointing at the auditing NFA staff.  Maybe that is warranted, but in my opinion the staff is poorly trained.  I believe that if you gut the upper management and start over with a practical common sense auditing procedure, the NFA staff would quickly adapt and change. [and the industry as a whole would be much better off]

This email was from a CTA who has managed hundreds of millions of dollars, and it speaks volumes about what sort of culture and regulatory environment has been created at NFA under Dan Roth’s watch.  Their staff is poorly trained. Despite recent catastrophes, their practices and policies on issues of importance are still shallow.

And nothing is going to change if we don’t speak up.

We do our best to make the arguments on behalf on the industry, but we’re just one voice. And we can provide examples of our own, but one story doesn’t make a case. Without examples being provided from around the industry, the arguments cannot gain the traction we need to actually get things moving. We urge you to share your stories. Email us directly, and we will share them on your behalf. But we need to get the ball rolling.

We understand that firms are concerned about retributive action. When this story first came to a head, there was heated debate in our office over whether or not we would risk just such a response. We decided two things.

For starters, the odds of such retributive action, in our opinion, are long. Between the PR headaches that coverage in the Wall Street Journal, Bloomberg, Reuters, CNBC and more would bring, and the probable dismissal of such unfounded charges by the CFTC, the odds of someone at NFA taking deliberate retributive action are quite long. Besides, despite our criticism of the organization, there are still hard-working, good people there who wouldn’t just drum up charges against someone without an actual violation.

Beyond that, though, we decided that the issue was too important to ignore. Here’s the thing – we can pass every reform in the book, but if the people enforcing them cannot be trusted, it won’t matter. That was the business decision. We cannot say we do right by our clients if we don’t demand that those charged with regulating the industry do so with integrity and competence.

Now is the time to set things right. We hope you’ll join the fight.