In recent actions, the National Futures Association (“NFA”) has issued formal complaints against two registered commodity pool operators (“CPOs”), Scalebuilder LLC and AC Investment Management LLC, for multiple alleged regulatory violations, ranging from improper solicitation practices and supervisory lapses to conflict-of-interest mismanagement and prohibited loans.

Case 1: Scalebuilder LLC

The NFA complaint against Scalebuilder LLC, a New Jersey-based CPO managed by Switzerland’s Ayaltis Group, centers on failures in registration, supervision, and regulatory reporting requirements. Since its registration with the Commodity Futures Trading Commission (“CFTC”) in 2022, Scalebuilder has operated two funds: the primary Scalebuilder Fund, which engages in futures and securities trading, and the smaller TB Fund, which invests in the main fund. Despite the firm’s growth, Scalebuilder is accused of allowing unqualified individuals to perform solicitation duties without the necessary registrations as Associated Persons (“APs”), required for investor solicitation and fund management.

The NFA complaint highlights that Robert Doeberl and Jeffrey Spotts, two principals of Scalebuilder, performed AP duties without proper registration. Doeberl, who has failed the Series 3 exam required for AP registration multiple times, nonetheless engaged in solicitation activities. Spotts, while unregistered with both the NFA and the CFTC, played a significant operational role, influencing investment terms and overseeing onboarding. Additionally, indirect owners Ernesto Prado and Gabriel Anastassiades were not registered as principals until 2024, despite their substantial involvement since 2022.

Scalebuilder’s supervisory issues extended into reporting inconsistencies, as the NFA found discrepancies in quarterly filings, particularly around the Scalebuilder Fund’s trading activities and capital sources. Furthermore, the TB Fund’s futures trading activities, which should have been disclosed and registered, were only reported after prompting by the NFA in 2024. The NFA’s charges against Scalebuilder emphasize the firm’s failure to meet essential compliance standards, risking penalties including fines, suspension, or expulsion if Scalebuilder fails to respond.

Case 2: AC Investment Management LLC

The NFA’s complaint against AC Investment Management LLC raises additional concerns, with the firm accused of prioritizing affiliated entities over its pools and allowing improper financial practices. AC Investment manages approximately $275 million and is accused of permitting loans from its pool, Aurelian Plus, to affiliated entities such as AC Scout LP and another company connected to its managing principal. These actions violated NFA Compliance Rule 2-45, which prohibits pools from lending to related parties.

Conflicts of interest played a central role, with the managing principal’s overlapping ownerships leading to questionable loan extensions and halted interest accrual on overdue loans. These delays and conflicts ultimately caused a loss of over $2.4 million in interest for one of AC’s pools, the AGR Master pool. The NFA argues that AC Investment’s actions failed to protect the interests of pool participants and violated Rule 2-4, which mandates commercial integrity.

Both firms have 30 days to respond to their respective complaints. Failure to respond or adequately address the allegations could lead to severe disciplinary actions, including fines, suspension, and disqualification from NFA membership.