FXCM UK Fined $140,000 by the CFTC


Last October we wondered what steps the CFTC would be able to take to enforce the new forex trading regulations that had just come into force, particularly when it came to pursuing offshore brokers in offshore courts.  Back in January they sued a few brokers using the US courts. Now they have used a different approach, which still hasn't required the CFTC to state their case in a foreign jurisdiction. It seems all they need to do is to ask nicely for some money!

The CFTC has just announced that it has:

Filed and simultaneously settled charges that Forex Capital Markets Ltd. (FXCM Ltd.) of London, U.K. acted as a retail foreign exchange dealer (RFED) by conducting retail leveraged forex transactions with U.S. customers without registering with the CFTC under the agency’s regulation 5.3(a)(6)(i). FXCM Ltd. has never been registered with the CFTC in any capacity.

The CFTC order requires FXCM Ltd. to pay a $140,000 civil monetary penalty and to cease and desist from further violating CFTC regulation 5.3(a)(6)(i).

According to the CFTC order instituting proceedings:

The Commodity Futures Trading Commission ("Commission") has reason to believe that from October 18,2010 to October 29, 2010, Forex Capital Markets Ltd. ("FXCM Ltd." or "Respondent") violated Commission Regulation 5.3(a)(6)(i), to be codified at 17 C.F.R.§ 5.3(a)(6)(i). 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 violation set forth herein and to determine whether any order should be issued imposing remedial sanctions.

Whether in the public interest or the interest of their shareholders FXCM seem to have thought it was prudent to settle this issue without getting as far as a court in either the US or the UK. According to the CFTC order once more:

In anticipation of the institution of an administrative proceeding, Respondent has submitted an Offer of Settlement (the "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 Sections 6(c) and 6(d) of the Commodity Exchange Act, As Amended, Making Findings and Imposing Remedial Sanctions ("Order") and acknowledges service of this Order.

Nothing's been admitted or proven, but FXCM UK have agreed to become a bit poorer, and the US authorities a bit richer.  How is any of this in the interests of the members of the US public who allegedly placed some trades via FXCM UK during those 11 days last October?

Filed under Regulation by  #

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