FXDD gets a $600,000 CFTC Penalty and Registration Ban

AsstModerator

FPA Forums and Reviews Admin
Messages
5,739
I'm told that FXDD recently transferred its retail clients in the US to FXCM. I wonder if this press release from the CFTC had anything to do with it...


RELEASE: PR7009-14

September 24, 2014


FXDirectDealer, LLC Ordered to Pay $600,000 Civil Monetary Penalty and to Comply with Three-Year Registration Ban as FCM or RFED for Violating Minimum Financial Requirements and a Prior CFTC Order

Firm’s Supervisory Failures Led to Repeated and Extended Periods of Undercapitalization

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against FXDirectDealer, LLC (FXDD), a CFTC-registered Retail Foreign Exchange Dealer (RFED) and Futures Commission Merchant (FCM) headquartered in New York, New York, for failing to meet the minimum financial requirements for RFEDs and FCMs, failing to supervise its employees, and failing to comply with a prior CFTC administrative order dated September 30, 2013 (Prior Order) (see CFTC Press Release 6725-13). FXDD has been registered with the CFTC as an FCM since December 10, 2009 and as an RFED since September 2, 2010.

Under CFTC Regulations, RFEDs and FCMs that offer or engage in retail foreign exchange (forex) transactions must at all times maintain adjusted net capital (ANC) of $20 million, or more in certain circumstances. In the Prior Order, the CFTC found that FXDD failed to maintain its required ANC during at least 18 separate months between November 2010 and December 2012 and ordered FXDD to, among other things, cease and desist from further violations of its ANC requirements.

According to the Order, during the period March 20, 2013 to December 11, 2013, FXDD improperly included certain funds held in an account at an unregulated entity in its ANC computations. After excluding those funds as required, the Order finds that FXDD was undercapitalized for 96 days between April 24, 2013 and December 13, 2013. Additionally, the Order finds that FXDD was undercapitalized for 41 days between September 30, 2013 and December 13, 2013 in violation of the Prior Order. The Order also finds that FXDD violated CFTC minimum financial requirements by making three prohibited equity withdrawals between January 13, 2014 and February 14, 2014.

Each of these violations, the Order finds, was a result of FXDD’s inadequate supervisory system and its failure to diligently supervise employees, officers, and agents with respect to the handling and monitoring of FXDD’s compliance with its minimum financial requirements.

The Order imposes a $600,000 civil monetary penalty against FXDD for its violations, as well as a cease and desist order and a three-year registration ban as an FCM or RFED. The Order notes that in settling this matter, the CFTC took into account the corrective action that FXDD undertook after its deficiencies were discovered and FXDD’s pending request to withdraw its registrations as an FCM and RFED.

The CFTC thanks the National Futures Association for its assistance.

CFTC Division of Enforcement staff members responsible for this case are Rachel Hayes, Charles Marvine, and Richard Wagner. Kevin Piccoli, Gerald Nudge, Robert Loeber, and Nicholas Chiacchere of the CFTC’s Division of Swap Dealer and Intermediary Oversight also assisted in this matter.


Original CFTC Press Release

Link to article about previous fines against FXDD
 
If regulated brokers are doing this, what should we expect from others?

I saw many scams from regulated broker the two best example its YTFX and Capital One BUT there are many genuine broker out there also so its our responsibility to check properly and always check every broker with small deposit.
 
I'm told that FXDD recently transferred its retail clients in the US to FXCM. I wonder if this press release from the CFTC had anything to do with it...



Original CFTC Press Release

Link to article about previous fines against FXDD

Oh what a grand show the CFTC is putting on after the egg on it's face from MFG and PFG!! We all owe a debt of gratitude to these tireless defenders of all investors. Where would we be without them?

Where were they when PFG was undercapitalized for decades? Where were they when the billions disappeared in an accounting shuffle at MFGlobal.

It's all a money-grabbing scheme with these bureaucracies. Do you think that 600k they took from FXDD will help you in any way? It will help them pay their exhorbitant sallaries while market in the US will become less competitive and we will pay this in spreads. In the meantime FXDD moved to Malta...
 
FXDD used to be a very good forex broker. All this changed when the NFA and CFTC started to come up with all these restrictive regulations a few years ago.
What happened next in my view is that FXDD was squeezed by these regulations and the need for high capital requirements. So they decided that the money had
to come from their clients and from that point, trading conditions changed for the worse with FXDD. They have been going downhill ever since and eventually exited
the USA which is an outcome the regulators over there had planned all along. I feel all these fines are no more than an overkill as FXDD has paid a lot of fines already.
Some of these fines look like the regulators are doubling up on them for the same offence. In my opinion, a case of regulators grabbing some more money from FXDD
on their way out.
 
Does this actually involve FXCM ? As I am considering them as my broker, any help would be much appreciated :)
 
The CFTC is slow, but effective. FXDD looks like it finally proved itself inadequate to operate inside the USA.

Does this actually involve FXCM ? As I am considering them as my broker, any help would be much appreciated :)

I'll bet FXDD had some warning this was coming, so sold off all their USA retail clients to the highest bidder.

Too bad I missed the auction. :p
 
The CFTC is slow, but effective. FXDD looks like it finally proved itself inadequate to operate inside the USA.



I'll bet FXDD had some warning this was coming, so sold off all their USA retail clients to the highest bidder.

Too bad I missed the auction. :p

The warnings were kind of public. The NFA was using FXDD's account as their own checking account. They had a permanent office at FXDD's US HQ.
Apparently somebody wasn't paid off at the NFA like was done with MFG and PFG.
 
Does this actually involve FXCM ? As I am considering them as my broker, any help would be much appreciated :)
 
I heard some rumors about Fxdd some days ago, and their probable relation with Fxcm. Looks like finally CFTC has got its hands on the guys involved in malpractices.
 
Back
Top