AI Hallucination ResearchAudiencesPractitionersUnited StatesPublic Auditors › Amendments to Regulation 1.25 — Permissible Investments of Customer Funds by Futures Commission Merchants and Derivatives Clearing Organizations
Practitioners — Public Auditors · updated 2026-06-04 · methodology v2.3
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AI on Amendments to Regulation 1.25 — Permissible Investments of Customer Funds by Futures Commission Merchants and Derivatives Clearing Organizations for Public Auditors in the United States

This is the consolidated view of findings. Click the Citation IDs or 'see details →' on any item for the full details for each finding.

  1. Fabricated uniform concentration limits; 50% tiered ceiling omitted
    RLB-F-US-CFTC-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024-Q001

    A public auditor relying on AI output for the concentration-limit framework would build a testing matrix that never tests the ≥$1B fund / ≥$25B management-company two-condition trigger — the entire tiered ceiling disappears, replaced by a flat 10% per-fund assertion the regulation does not contain. An FCM holding a large qualifying government money market fund position above 10% but within the permissible 50% tier would appear non-compliant in the auditor's work papers, or conversely an FCM at 45% with a non-qualifying fund would appear compliant when it is not.

    Either direction produces a defective audit conclusion, and the error traces back to parameters the auditor sourced from AI rather than the final rule text.

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  2. Fabricated SIDR compliance deadline; actual date March 31 2025
    RLB-F-US-CFTC-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024-Q004

    An auditor advising an FCM on its post-amendment compliance program who accepts the AI's 'six months to a year' estimate for the SIDR and risk-disclosure update deadline hands the client a timeline that misses the actual March 31, 2025 deadline by roughly five to ten times. If that timeline feeds into a management letter or a board-level compliance report, the FCM may treat the obligation as a mid-to-late 2025 project and arrive at the March 31 deadline out of conformance — with the auditor's own advice on the record as the basis for the delay.

    CFTC examination findings arising from a missed SIDR update deadline carry direct regulatory consequence, and the audit firm's documentation trail is the first thing staff will review.

    see details →